Department of Health and Social Care Group Accounting

Department of Health and Social Care

Group Accounting Manual 2021-22

Published xx April 2021

Contents

Summary of Changes .......................................................................................................... 6

1. Introduction ................................................................................................................... 7

Purpose and Applicability of the Manual ........................................................................... 7

Format of the Manual ....................................................................................................... 7

Scope and Definitions ....................................................................................................... 8

2. Financial reporting framework ..................................................................................... 11

Legislative Framework .................................................................................................... 11

Accounting Framework ................................................................................................... 12

Group and Consolidated Accounts ................................................................................. 15

Budgeting Framework .................................................................................................... 19

Other Framework Issues ................................................................................................ 20

Chapter 2 Annex 1: Companies Act 2006 Requirements................................................... 23

Chapter 2 Annex 2: Other Relevant Accounting Pronouncements .................................... 25

Chapter 2 Annex 3 - Accounts Directions (structure) ......................................................... 26

Chapter 2 Annex 4 - NHS Trust Accounts Directions ........................................................ 27

Chapter 2 Annex 5 - Laying annual report and accounts before Parliament ...................... 30

Statutory requirement ..................................................................................................... 30

The process of laying papers before Parliament ............................................................ 31

Deadlines for laying documents before Parliament ........................................................ 31

Chapter 2 Annex 6 - CCG and NHS Trusts Annual Audit Reports ..................................... 33

Chapter 2: CCG Appendix 1 .............................................................................................. 34

Performance measures .................................................................................................. 34

3. Form and content of the Annual Report ...................................................................... 37

Introduction ..................................................................................................................... 37

General Principles .......................................................................................................... 37

Accounting/Accountable Officer Responsibilities ............................................................ 38

CCG Governance ........................................................................................................... 39

Performance Report ....................................................................................................... 39

The Accountability Report .............................................................................................. 44

Publication of the Annual Report and Accounts.............................................................. 63

Chapter 3 Annex 1 - Annual Report and Accounts Outline Structure ................................ 65

Chapter 3 Annex 2 - Salary and Pension disclosure tables: information subject to audit .. 66

Salaries and allowances ................................................................................................. 66

Chapter 3 Annex 3 – Exit packages and severance payments .......................................... 77

Introduction ..................................................................................................................... 77

Exit packages ................................................................................................................. 77

Non-compulsory departures ........................................................................................... 77

Chapter 3 Annex 4 – “Off-payroll” engagements ............................................................... 82

Introduction ..................................................................................................................... 82

Reformed off-payroll Working Rules ............................................................................... 82

Inclusion in Annual Reports ............................................................................................ 83

Guidance ........................................................................................................................ 83

Chapter 3 CCG Appendix 1: Additional Requirements for CCGs ...................................... 90

Business information ...................................................................................................... 90

Details of Members of the Membership Body and Governing Body ............................... 90

Chapter 3 CCG Appendix 2 – Pension Disclosures ........................................................... 92

Introduction ..................................................................................................................... 92

Prior Year Comparatives ................................................................................................ 93

4. Accounting principles and policies............................................................................... 97

Applicability of IFRS ....................................................................................................... 97

Adaptations and interpretations ...................................................................................... 97

Accounting standards not yet adopted ........................................................................... 97

Departures from the FReM ............................................................................................. 97

Accounting Concepts ...................................................................................................... 98

Accounting policies and materiality ............................................................................... 101

Accounting for Income and Expenditure ....................................................................... 105

Accounting for Assets and Liabilities ............................................................................ 116

Group Accounting Standards........................................................................................ 136

Business Combinations ................................................................................................ 143

Changes in Entity Status – Reporting Requirements .................................................... 148

Events after the reporting period .................................................................................. 148

Related party disclosures ............................................................................................. 149

Chapter 4 Annex 1: IFRS Standards and applicability to the DHSC group ...................... 150

International Financial Reporting Standards (IFRS) ..................................................... 150

International Accounting Standards (IAS) ..................................................................... 157

IFRS Interpretations Committee (IFRIC) Interpretations ............................................... 170

Standards Interpretation Committee (SIC) Interpretations ............................................ 174

Chapter 4 Annex 2: IFRS Standards and amendments issued but not yet adopted in the FReM ............................................................................................................................... 176

Standards issued or amended but not yet adopted in FReM ........................................ 176

Chapter 4 Annex 3: Departures from the FReM .............................................................. 177

Chapter 4 Annex 4 - Valuation Issues ............................................................................. 178

Modern Equivalent Asset (MEA) valuations ................................................................. 178

Recognition and measurement ..................................................................................... 178

Disclosure ..................................................................................................................... 180

Equipment .................................................................................................................... 180

Chapter 4 Annex 5: Accounting requirements for PFI/LIFT schemes .............................. 182

PFI and LIFT................................................................................................................. 182

Recognition of assets under PPP or PFI arrangements ............................................... 183

Disclosures ................................................................................................................... 184

Service concession arrangements in budgets .............................................................. 184

Budget adjustment in summarisation schedules........................................................... 186

Chapter 4 Annex 6: Financial Instruments ....................................................................... 187

Introduction ................................................................................................................... 187

IFRS Standards ............................................................................................................ 187

HM Treasury interpretations and adaptations ............................................................... 188

Definition of financial instruments ................................................................................. 188

Recognition and de-recognition .................................................................................... 190

Classification and measurement ................................................................................... 191

Embedded derivatives .................................................................................................. 200

Hedge accounting ......................................................................................................... 202

Disclosures ................................................................................................................... 202

Other guidance ............................................................................................................. 205

Chapter 4 Annex 7 - Treasury Discount Rates ................................................................ 206

Summary of discount rates to be applied as at 31 March 2022 .................................... 206

General provisions ........................................................................................................ 207

Inflation assumptions .................................................................................................... 208

Post-Employment Benefits Provisions .......................................................................... 210

Financial instruments .................................................................................................... 210

Chapter 4 Annex 8 – Accounting for Pooled Budgets and Joint Arrangements ............... 212

Introduction ................................................................................................................... 212

The Better Care Fund (BCF) ........................................................................................ 212

Relevant accounting standards and guidance .............................................................. 213

Detailed guidance ......................................................................................................... 214

Cash management ....................................................................................................... 225

Other reporting requirements........................................................................................ 227

Chapter 4 Annex 9: Reporting requirements on change of status ................................... 229

NHS trusts attaining NHS foundation trust status ......................................................... 229

New NHS trusts and foundation trusts in their first period of operation ........................ 231

NHS trusts and foundation trusts in their final period of operation ................................ 232

Changes to Clinical Commissioning Groups................................................................. 236

Changes to DHSC ALBs .............................................................................................. 237

Chapter 4 Annex 10: Accounting for Maternity Pathways ................................................ 240

Scope of IFRS 15 ......................................................................................................... 240

CCG perspective .......................................................................................................... 241

Provider perspective ..................................................................................................... 242

Rationale behind Revenue Classification ..................................................................... 242

Revenue Recognition ................................................................................................... 245

Lead Provider – secondary transactions ...................................................................... 245

Conclusion .................................................................................................................... 246

5. Form and content of the Financial Statements .......................................................... 247

Introduction ................................................................................................................... 247

Annual Accounts Format .............................................................................................. 247

Accounting policies ....................................................................................................... 249

Statement of Comprehensive Income (SoCI) / Comprehensive Net Expenditure (SoCNE) ....................................................................................................................... 250

Notes to SoCI / SoCNE ................................................................................................ 252

Statement of Financial Position (SoFP) ........................................................................ 263

Notes to SoFP .............................................................................................................. 264

Statement of Changes in Taxpayers Equity (SoCTE) ................................................... 271

Statement of Cash Flows (SoCF) ................................................................................. 272

Other Disclosure Notes ................................................................................................ 273

Chapter 5 Annex 1: Example accounting policies ............................................................ 286

Chapter 5 Annex 2: Consultancy definition ...................................................................... 307

Summary of Changes

For ease of reference, the key changes in this document compared to the Department of

Health and Social Care Group Accounting Manual 2020-21 (GAM 2020-21) are set out

below. The comparisons are to the final published document.

Area of Change GAM 2021-22

GAM 2020-21

1 Revised Fair Pay Disclosures in line with changes made to the HM Treasury 2021-22 Financial Reporting Manual (FReM)

3.105 to 3.118

3.65 to 3.71

2 Expanded guidance regarding applicability of Managing Public Money to all DHSC group bodies

Below 2.85 Below 2.47

NHS trusts: clearer guidance on performance reporting and incorporating performance against national quality indicators

4 Updated references to EU-adopted IFRS, changing to UK adopted IFRS and references to NHS England and NHS Improvement

Various Various

5 Cosmetic changes to reduce paragraph length to improve understandability and impact of key messages throughout the GAM

All Chapters

1. Introduction

1.1 The Department of Health and Social Care (DHSC) and bodies within the DHSC

accounting boundary have a statutory requirement to produce an annual report

and accounts (ARA) following the end of the financial year.

1.2 Additionally, DHSC must produce a consolidation of accounts data for the bodies

within the accounting boundary. This Group Accounting Manual (GAM) is DHSC’s

guidance and instruction to these bodies on preparing and publishing an ARA.

Purpose and Applicability of the Manual

1.3 DHSC group bodies are required to prepare accounts in accordance with

International Financial Reporting Standards (IFRS) as adopted in HM Treasury’s

'Financial Reporting Manual' (FReM), subject to any agreed divergences for the

DHSC group, or through subordination to the Companies Act 2006.

1.4 The GAM incorporates the requirements of the FReM for DHSC group bodies,

interprets them as appropriate, and provides additional guidance and context

relevant to the NHS.

1.5 DHSC group bodies must comply with the requirements of the GAM, and in so

doing can expect to achieve compliance with the FReM.

1.6 The GAM is not an accounting textbook and does not set out to explain standard

accounting principles.

1.7 DHSC group bodies must ensure they are sufficiently familiar with IFRS Standards

to achieve the necessary compliance. The GAM provides guidance on the

applicability of these standards.

Format of the Manual

1.8 The subsequent chapters in this manual are arranged as follows:

• Chapter 2 provides information on the framework under which the ARA must be

completed

• Chapter 3 covers the form and content of the annual report

• Chapter 4 covers accounting principles, including application of standards, HM

Treasury interpretations and adaptations and specific accounting policies

• Chapter 5 covers the form and content of the financial statements and accompanying

disclosures.

1.9 The GAM thematically addresses the application of standards. For example IFRS

9 is referenced in;

• Chapter 4 regarding accounting for assets and liabilities,

• Chapter 4 Annex 1 in which the public sector adaptations and interpretations are

replicated,

• Chapter 4 Annex 6 in which additional guidance is provided on financial instruments

accounting under IFRS 9, and,

• Chapter 5 Annex 1 in the example accounting policy note.

1.10 Cross references and hyperlinks are employed to ensure users can quickly locate

the guidance for specific standards throughout the GAM.

1.11 Annexes are used in this manual to provide further specific background

information on the requirements.

1.12 Annexes provide useful additional information on more complex issues for those

that require it, away from the main manual. These can be found after the chapter

they relate to (for example, the application of asset valuation methods is explained

in Chapter 4 Annex 4 Valuation Issues).

1.13 Additional appendices are included within this manual to supplement the core

guidance where there are additional sector specific reporting requirements.

1.14 Appendices form an integral part of the manual and are organised to assist in

locating entity specific guidance (for example, the CCG corporate governance

reporting requirements are presented in the two CCG appendices to Chapter 3).

Scope and Definitions

1.15 This manual applies to entities designated for consolidation within the accounting

boundary of the Department of Health and Social Care. These entities must follow

its requirements in preparing their ARA. Where parts of this guidance are relevant

to specific entities and sectors within the group, this is clearly indicated.

1.16 For annual reporting requirements only, NHS foundation trusts must follow the

separate NHS Foundation Trust Annual Reporting Manual 2020-21 (FT ARM

2020-21).

1.17 NHS charities must follow the Charities Statement of Recommended Practice

(SORP) FRS 102. The requirements of this manual only apply to the results of

NHS charities where they are consolidated within the accounts of a parent NHS

provider.

1.18 For the purposes of this manual, references to entities that follow this manual are

defined as follows:

• Department of Health and Social Care – The core Department of Health and Social

Care, excluding all other group bodies,

• NHS trusts, as established under Section 25 of the National Health Service Act 2006,

• NHS foundation trusts, as authorised by Monitor under Section 35 of the National

Health Service Act 2006,

• NHS providers – All NHS trusts and NHS foundation trusts,

• established under Section 25 of the Health and Social Care Act 2012

• NHS England – The legal entity NHS Commissioning Board (including Commissioning

Support Units), which is also an NDPB,

• NHS Improvement - the banner under which the legal entities Monitor and NHS trust

Development operate,

• NHS England and NHS Improvement - the operating name of the national body that

leads and regulates the NHS in England,

• NHS commissioners – NHS England and all clinical commissioning groups,

• NHS bodies – All NHS providers and clinical commissioning groups,

• NHS charities – Charitable entities within the DHSC accounting boundary, either those

consolidated by parent NHS providers or independent charities consolidated directly

by DHSC,

• DHSC agencies – Executive agencies within the DHSC accounting boundary

(currently only Public Health England)

• Special health authorities – Entities within the DHSC accounting boundary established

as special health authorities,

• DHSC NDPBs – Non-departmental public bodies within the DHSC accounting

boundary. This includes NHS England unless stated otherwise,

• Other DHSC bodies – Other bodies designated for consolidation within the DHSC

accounting boundary, including limited companies,

• DHSC ALBs – Arm’s length bodies within the DHSC accounting boundary, comprising;

• DHSC agencies,

• special health authorities,

• DHSC NDPBs and

• other DHSC bodies.

• This includes NHS England, unless stated otherwise (Note that the FReM uses a

different definition of arm’s length bodies, which includes all bodies within a

departmental group except the core department and executive agencies)

• DHSC group bodies – All entities designated for consolidation within the DHSC

accounting boundary.

2. Financial reporting framework

2.1 This chapter sets out the framework of legislation, regulations and guidance under

which DHSC group bodies prepare their annual reports and accounts and are held

accountable for their financial performance.

Legislative Framework

Government Resources and Accounts Act 2000

2.2 The departmental accounting group is defined in law by Designation Orders made

under the Government Resources and Accounts Act 2000 (GRAA).

2.3 The GRAA requires DHSC group bodies to:

• prepare such financial information in relation to the year as HM Treasury may request

• present the information in such form as HM Treasury may direct

• arrange for the information to be audited, and

• deliver the information to HM Treasury, in such manner and by such date in the next

year as HM Treasury may direct.

NHS foundation trusts

2.4 The requirements for NHS foundation trusts are set out in paragraphs 24 and 25 of

Schedule 7 to the National Health Service Act 2006 (the ’2006 Act’).

2.5 There are three main statutory requirements for an NHS foundation trust in relation

to its accounts:

• to keep proper accounts and proper records in such form as the regulator may, with

the approval of the Secretary of State, direct

• to prepare in respect of each financial year annual accounts in such form as the

regulator may, with the approval of the Secretary of State, direct, and

• to comply with any directions given by the regulator, with the approval of the Secretary

of State, as to:

• the methods and principles according to which the accounts are to be prepared

• the content and form to be given in the accounts.

2.6 The regulator Monitor (one of the legal entities operating under the banner NHS

England and NHS Improvement (NHSE and NHSI)) issues these directions as part

of the FT ARM.

2.7 As guided in the directions, the GAM is directly applicable to NHS foundation

trusts, except for guidance set out in Chapter 3. Annual reporting guidance will

continue to be published alongside the accounts direction in the FT ARM.

Companies Act 2006 requirements

2.8 Although the use of IFRS means that the main generally accepted accounting

practice (GAAP) requirements of the Companies Act 2006 do not apply to the

DHSC group, there are nevertheless some disclosure requirements that remain

applicable as listed in Chapter 2 Annex 1 Companies Act 2006 requirements.

2.9 This does not remove requirements per the Companies Act 2006 in relation to

individual entity statutory accounts where applicable, such as for limited

companies.

Accounting Framework

2.10 To present a true and fair view, the accounts of the DHSC group must comply with

IFRS, as adopted by the FReM, unless directed otherwise.

2.11 As the FReM, like the GAM is not an accounting textbook, a key source of

guidance will be the accounting standards and supplementary guidance, published

by the International Accounting Standards Board.

Generally accepted accounting practice (GAAP)

2.12 This manual follows GAAP to the extent that it is meaningful and appropriate to the

DHSC group. GAAP consists of:

• the accounting and disclosure requirements of the Companies Act 2006, and

• pronouncements by or endorsed by the International Accounting Standards Board

(IASB) including the Conceptual Framework for Financial Reporting, IFRS Standards

and Interpretations,

• interpreted as necessary by the body of accumulated knowledge built up over time and

promulgated in, for example, textbooks, technical journals and research papers.

2.13 Where no relevant IFRS guidance exists, reference may be made to other

appropriate accounting standards, such as UK GAAP, to the extent that these do

not conflict with the requirements of IFRS Standards and Interpretations dealing

with similar issues and the Conceptual Framework for Financial Reporting. See

also Chapter 2 Annex 2: Other Relevant Accounting Pronouncements and

paragraph 2.16.

International Financial Reporting Standards (IFRS)

2.14 The IASB Conceptual Framework for Financial Reporting sets out the principles

that should underlie general purpose financial statements, the objective of which is

to provide information about the financial position, performance and changes in

financial position.

2.15 Presentation should meet the ‘common needs of most users’.

2.16 This manual follows IFRS, as adopted by the UK, to the extent that it is relevant

and appropriate to the DHSC Group:

• IFRS Standards issued by the International Accounting Standards Board (IASB)

• International Accounting Standards (IASs) issued by the predecessor International

Accounting Standards Committee (IASC) and subsequently adopted by the IASB

• Interpretations issued by the IFRS Interpretations Committee (IFRS IC, previously

IFRIC)

• Interpretations issued by the predecessor Standing Interpretations Committee (SIC)

and subsequently adopted by IFRIC

• the Conceptual Framework for Financial Reporting issued by the IASB.

UK-adopted IFRS

2.17 Listed companies that prepare group accounts are required to do so in accordance

with IFRS as adopted by the UK rather than IFRS as published by the IASB.

2.18 The adoption process sometimes creates a delay between the IASB or IFRS IC

issuing a pronouncement and its subsequent UK adoption, during which time

companies cannot early-adopt the new, or amended, requirements.

2.19 HM Treasury’s approach in the FReM is to apply UK-adopted IFRS with some

adaptations and interpretations.

2.20 DHSC group bodies must apply IFRS as adopted by HM Treasury in the FReM

(see Chapter 4 Annex 1: IFRS Standards and applicability to the DHSC group),

except where additional departures and interpretations have been agreed by

DHSC (see Chapter 4 Annex 3: Departures from the FReM).

Government Financial Reporting Manual (FReM)

2.21 The 2021-22 GAM has been drafted to meet the requirements of the 2021-22

2.22 The FReM is HM Treasury’s technical accounting and annual report guidance for

the preparation of public sector accounts (including, but not limited to, central

government departments, executive agencies and arm’s length bodies).

2.23 The FReM follows IFRS and Companies Act requirements.

2.24 In several important areas, the FReM provides interpretation and adaptation of

IFRS Standards to better meet Government’s reporting requirements.

2.25 The FReM also details additional disclosures for the public sector.

2.26 DHSC arm’s length bodies (ALBs) should additionally refer to the relevant

illustrative accounts, provided by HM Treasury in supplement to the FReM, to

ensure the ARA is presented in the correct format (see paragraph 5.21).

Group Accounting Manual (GAM)

2.27 The GAM is a further interpretation of the FReM, providing technical guidance to

DHSC group bodies that specifically addresses their requirements.

2.28 The GAM is compliant with the FReM, other than for specifically agreed

divergences (see Chapter 4 Annex 3: Departures from the FReM).

2.29 It is expected that those preparing ARAs will consult the GAM alongside the

relevant accounting standards, and thereby comply with the FReM.

2.30 The GAM is not an accounting textbook and does not repeat IFRS requirements

where these can be applied without specific interpretation or adaptation for the

DHSC group.

2.31 The GAM:

• forms part of accounts directions issued to reporting bodies

• mandates particular accounting treatments where standards permit a choice, to ensure

consistency within the DHSC group

• draws attention to interpretations and adaptations of IFRS Standards set out in the

FReM, usually repeating the required departures from IFRS Standards

• highlights specific departures from the FReM, as agreed with Treasury, applicable to

the users of this manual

• specifies scope, contents and layout of the ARA, to ensure that these documents meet

HM Treasury expectations and provide consistent data for national summaries and

consolidations, and

• provides detailed accounting guidance in complex and technical areas (for instance,

Private Finance Initiative (PFI) and group reconstruction) where IFRS requirements

need consistent application in the NHS context.

2.32 This manual will be supplemented, as necessary, by numbered 'frequently asked

questions' (FAQ) updates over the course of the year.

2.33 These updates will be posted to the Department of Health and Social Care group

accounting manual area of ‘.gov.uk’. All content issued in this way will have the

same status as guidance issued in this manual. Users should check the

Department of Health and Social Care group accounting guidance area regularly

for new guidance.

Financial Reporting Advisory Board (FRAB)

2.34 The Financial Reporting Advisory Board provides independent accounting advice

in respect of public sector bodies to HM Treasury.

2.35 Approval is sought from FRAB on changes made to the FReM and to the DHSC

group manuals (GAM and FT ARM) before they are published. FRAB also

approves departmental divergences from the FReM.

Group and Consolidated Accounts

2.36 The financial reporting requirements for the DHSC group are determined by the

Department of Health and Social Care with the approval of HM Treasury.

2.37 DHSC has a role as the relevant authority for agreeing the reporting requirements

for the group, and therefore any concerns about the content of this manual should

be raised with DHSC or the relevant national body, rather than directly with HM

Treasury.

2.38 As a relevant authority, the Department of Health and Social Care has the power

to set the accounts direction for DHSC group bodies (with some exceptions, as

explained below).

2.39 These directions require compliance with this manual, which provides specific

guidance on how DHSC group bodies should prepare their accounts.

2.40 Full details of accounts directions issued within the group are set out in Chapter 2

Annex 3 - Accounts Directions (structure). The text of the accounts direction for

NHS trusts is included in Chapter 2 Annex 4 - NHS Trust Accounts Directions.

DHSC group account

2.41 DHSC is responsible for the preparation of a group account.

2.42 Whereas an entity’s accounting boundary is normally determined by control

criteria, such as those set out in IFRS 10, Consolidated Financial Statements,

government departments’ boundaries are determined by the classification of

entities to the public sector and subsequent allocation to a parent department.

This process is known as designation.

2.43 Entities are classified by the national accounts classification criteria set out by the

Office for National Statistics (ONS).

2.44 This classification process determines whether an entity is considered part of the

public sector and what type of body it is (for example, central government or local

government).

2.45 Most entities classified to central government will be allocated to a parent

department. This process is carried out by ONS, with input from HM Treasury,

based on the nature and role of the entity in question.

2.46 All entities allocated to a department, with some exceptions (for instance, trading

funds and public corporations), are considered to fall within its accounting

boundary.

2.47 The parent department consolidates these entities as though they are wholly

owned subsidiaries, regardless of how they would be treated under IFRS 10 and

related standards.

2.48 With the advent of Sustainability and Transformation Partnerships (STP), evolving

into Integrated Care Systems (ICS), new entities and joint ventures are continually

being developed to deliver healthcare services. These new entities will need to be

assessed to determine whether they are DHSC group bodies and should therefore

be consolidated.

2.49 Any organisation is likely to be designated for consolidation where it is jointly

owned or majority owned by organisations within the DHSC accounting boundary

(determined by adding together the levels of ownership of all DHSC group bodies)

and where it delivers healthcare services through NHS contracts.

2.50 Organisations are also likely to be designated for consolidation where the risks

and rewards of the organisation are held by the DHSC/NHS collectively or other

factors of control are met, as set out in the Manual on Government Deficit and

2.51 Determining factors include appointment of officers, determination by government

of functions, objectives and operating provisions, contractual arrangements,

degree of financing, and risk exposure.

2.52 DHSC group bodies that control any new entities (and any JVs not officially

designated) must raise these with NHSE or NHSI or DHSC initially, and may need

to complete the HMT designation questionnaire as part of the classification

process.

2.53 The list of designated entities is confirmed each year in a Designation Order. The

current Order is SI 2020 No. 1530, The Government Resources and Accounts Act

2000 (Estimates and Accounts) (Amendment) (No. 2) Order 2020.. Amendments

to this order will be made in 2021 and 2022.

2.54 The DHSC group account is prepared directly in accordance with the FReM. The

department’s accounting policies are consistent with the principles of the GAM.

NHS England group account

2.55 In accordance with the Health and Social Care Act 2012, NHS England (operating

as part of NHSE and NHSI) is required to prepare a group account consolidating

the accounts of clinical commissioning groups (CCGs).

2.56 NHSE and NHSI is also required to issue accounts directions to CCGs in respect

of their ARA. As the accounts directions require compliance with the 2021-22

GAM, the content of this manual is applicable to CCGs and to NHSE and NHSI.

NHS trusts, foundation trusts and consolidated provider account

2.57 Monitor (operating as part of NHSE and NHSI) is responsible for preparing a

sector-specific consolidated account for NHS foundation trusts, as required by

paragraph 17(1), Schedule 8 to the Health and Social Care Act 2012.

2.58 NHSE and NHSI will also prepare a consolidated account for all NHS providers. It

follows that financial returns submitted by NHS trusts and NHS foundation trusts to

NHSE and NHSI, and the submission of FT and provider consolidated financial

data by NHSE and NHSI to DHSC, must be prepared in accordance with

accounting policies set out in this manual.

Summarisation schedules

2.59 Summarisation schedules are the method of collecting accounts data by DHSC,

NHSE and NHSI for accounts consolidation purposes.

2.60 The summarisation schedules are provided by these bodies in a set format to

ensure all data required for the accounts is collected. The collections allow the

sector sub-consolidations and the DHSC group consolidation to be completed.

2.61 The content within the summarisation schedules must be compliant with this

manual and be consistent with the entity’s own ARA. The term “summarisation

schedule” will refer to all of the following, unless otherwise stated:

• The Department of Health and Social Care Accounts Consolidation Schedule for

DHSC ALBs

• The TAC schedules incorporated into the provider finance in year monitoring return

(PFR) issued by NHSE and NHSI

• NHSE and NHSI CCG_CSU template.

2.62 While discretion applies in the format of the published ARA based on the

application of materiality, DHSC group bodies must complete the whole of the

summarisation schedule.

2.63 While balances may not be material at an entity level, the totals may aggregate

across the sector/group to a material level that DHSC or the relevant national body

would need to disclose on consolidation.

2.64 There are other data requests in the schedules which provide additional assurance

on the accounts, such as agreement of balances data, or for other purposes, such

as management information or Whole of Government Accounts completion.

2.65 Before submission to DHSC or the relevant national body, it is important for any

validation issues to be cleared. This helps to provide assurance for the

consistency of data submitted to the relevant national body, and for the entity’s

annual accounts.

2.66 Entities may also be required to provide their audited annual accounts to the

relevant national body or DHSC for consistency checking.

2.67 Completion guidance and submission timetables will be released towards the end

of 2021.

Budgeting Framework

2.68 The majority of financing for the NHS derives ultimately from Parliamentary

funding issued to DHSC by means of the Estimate process.

2.69 DHSC is accountable to Parliament for these funds and subject to budgetary

control by HM Treasury.

2.70 HMT sets separate budgets for Resource and Capital, covering in year income

and expenditure requirements and funding for investment. Additionally, these

budgets are analysed into:

• Departmental Expenditure Limits (DEL)

• Annually Managed Expenditure (AME).

2.71 The financial performance of DHSC group bodies forms part of the consolidated

budget outturn reported by DHSC.

2.72 Group bodies must therefore provide information at a sufficiently detailed level to

enable the budgetary treatment to be identified. Completion of the summarisation

schedules ensures this.

2.73 The budgetary regime is aligned to National Accounts, which report on the UK

economy.

2.74 These are based on the national frameworks and guidance which differ from IFRS

in several areas, and therefore there are misalignments between budgets and

financial accounts.

2.75 Additional information may be required to calculate the necessary adjustments to

budget outturn. Examples are set out in the following paragraphs.

2.76 Public Private Partnerships (PPPs) – These are generally accounted for as service

concession arrangements under IFRS, resulting in recognition of an asset and

corresponding liability. Different criteria apply under national frameworks and

guidance to determine whether an arrangement should be reported ‘on-balance

sheet’, and many PPPs will be ‘off-balance sheet’ for the purposes of HMT

budgetary controls. Where this is the case, information on the treatment under

national frameworks and guidance will be required to establish the necessary

adjustment to budget outturn. This is described in more detail in Chapter 4 Annex

5: Accounting requirements for PFI/LIFT schemes.

2.77 Capital grants – Grants paid to external bodies are treated as revenue expenditure

in financial accounts. However, where these grants finance investment, they are

required to score against Capital for the purposes of HMT budgetary controls. Any

expenditure identified in summarisation schedules as capital grants is

automatically reclassified to Capital for budgetary purposes.

2.78 Research and development – Most research and development expenditure cannot

be capitalised under IFRS. However, all such expenditure, including staff costs,

scores against Capital for the purposes of HMT budgetary controls. DHSC has

agreed with HMT that, to avoid double counting where DHSC commissions

research from its arm’s length bodies, the group expenditure on research and

development for budgetary purposes will be based on spend in core DHSC only.

DHSC ALBs and NHS bodies will therefore be unaffected and will report research

and development as revenue spend, except where IFRS permits capitalisation of

an asset.

Other Framework Issues

Accounts submission

2.79 A detailed accounts submission process, showing deadlines and procedures for

handling statutory accounts and summarisation schedules will be provided by the

relevant national bodies later in the year.

2.80 Treasury 'Public Expenditure System' (PES) papers give detailed guidance for

laying ARAs in Parliament. These papers apply primarily to government

departments.

2.81 Where relevant to entities that follow the GAM, PES requirements have been

incorporated into the GAM or will be included in this manual’s FAQs.

2.82 Guidance for DHSC group bodies on the process for laying ARAs in Parliament is

included in Chapter 2 Annex 5 - Laying annual report and accounts before

Parliament.

General Data Protection Regulation (GDPR)

2.83 The provision of advanced notification to individuals affected, by an entity's intent

to disclose personal information in the remuneration report section of the annual

report, is covered in Chapter 3 of the GAM.

2.84 Group bodies should also consider whether any other personal information

contained within the annual report and accounts should be subject to the GDPR

considerations that are set out in paragraphs 3.81 and 3.83.

Other guidance

2.85 Many of the following items will be made available subsequent to the GAM being

issued. These do not form part of the manual, but form part of a wider body of

guidance:

• NHSE and NHSI issues Monthly Financial Monitoring Guidance for NHS providers to

facilitate the completion of the monthly monitoring returns, with further detail on the

Trust Account Consolidation (TAC) schedules at months 9 and 12. Where detailed

accounting guidance is required, NHS providers must follow this manual, to ensure

consistency of reporting through the year.

• NHSE and NHSI will issue accounts templates for NHS providers at Q4 which are

optional for use and do not form part of its accounts direction to NHS foundation

trusts and do not form part of the GAM (see paragraphs 5.17 to 5.24 for the full list

of example accounts).

• NHSE and NHSI issues a model accounts template for CCGs use of which is optional

and does not form part of its accounts direction and does not form part of the GAM.

• Additional guidance for CCGs is issued by NHSE and NHSI on their SharePoint

• For Month 9: Detailed completion guidance for DHSC summarisation schedules is also

provided alongside the quarterly monitoring guidance.

• Guidance on agreement of balances exercises, issued by DHSC.

• HM Treasury’s Managing Public Money (MPM), which applies to all DHSC group

bodies. DHSC Group bodies must therefore ensure they are sufficiently aware of

MPM requirements. Entities should note;

• MPM adherence includes, but is not limited to, following MPM requirements

around obtaining prospective HM Treasury approvals for;

• novel, contentious or repercussive expenditure - including certain losses or

special payments such as special severance payments,

• novel, contentious or repercussive commitments - such as certain contingent

liabilities,

• spend outside the Department's delegated limits or authorities - such as the

giving of gifts.

• Expenditure and commitments entered into without HM Treasury approval, where

required, is irregular.

• Early and prospective engagement with the entities national body or DHSC

sponsor to avoid issues concerning the regularity or propriety of a transaction is

essential.

• Further reference is made to the reporting and disclosure requirements for ARAs

prescribed in MPM, in Chapter 3 and Chapter 5 of the GAM.

2.86 Additional requirements for clinical commissioning groups are set out below in

Chapter 2: CCG Appendix 1.

Chapter 2 Annex 1: Companies Act 2006

Requirements

2.87 The following table lists the financial reporting requirements under the Companies

Act 2006, and how they are applicable to the accounts of departmental group

bodies.

CA2006 Reference Regulations Reference

per SI 2008 No.410, The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008

Description

Section 409 Regulation 7 and Schedule 4 Information about related undertakings in a note to the accounts.

Section 410A per SI 2008 No.393, The Companies Act 2006 (Accounts and Reports) (Amendment) Regulations 2008

Information about off-SoFP arrangements in a note to the accounts.

Section 411 Information about employee numbers and costs in a note to the accounts. For DHSC group bodies, staff numbers and costs are included in the staff report within the annual report.

Section 412 (1) to (5) Regulation 8 and Schedule 5 Not required by the FReM, as these requirements are considered to be met by the preparation of a remuneration report as part of the annual report.

Section 413 NHS foundation trusts only: Information about directors’ benefits: advances, credit and guarantees, in a note to the accounts.

Sections: 414A(1),(3) and (4); 414C and 414D(1);

Strategic Report These requirements are adapted into the Performance Report: see chapter 3 (for bodies

CA2006 Reference Regulations Reference

per SI 2008 No.410, The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008

Description

as modified / inserted by SI 2013 No.1970, The Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013

other than NHS foundation trusts).

Sections: 415(1) to (3) 416; As modified / inserted by SI 2013 No.1970, The Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013;

418(1) to (4); and 419(1).

Regulation 10 and Schedule 7 Directors’ report These requirements are adapted for the public sector: see chapter 3 (for bodies other than NHS foundation trusts).

Sections: 420(1); 421(1) to (2); and 422(1).

Regulation 11 and Schedule 8 Quoted Companies: Directors’ Remuneration Report Section 497 which requires auditors to report on elements of the directors’ remuneration report in the audit opinion is applicable. These requirements are adapted for the public sector: see chapter 3 (for bodies other than NHS foundation trusts).

Sections 426 and 426A as modified / inserted by SI 2013 No.1970, The Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013

Contents of strategic report with supplementary material. (applicable only if the entity chooses to prepare an additional performance overview report with supplementary material).

Chapter 2 Annex 2: Other Relevant

Accounting Pronouncements

2.88 Certain types of transactions, for which there are no relevant requirements under

IFRS, must be accounted for using the appropriate UK GAAP requirements.

These transactions are set out in the following table:

Transactions not

covered by IFRS

requirements

Accounting

requirements to be

applied

FReM reference

Accounting for value added tax (VAT).

FRS 102 paragraph 29.20 None

Accounting for Heritage Assets

FRS 102 paragraphs 34.49 to 34.35

10.1.31 to 10.1.48

Chapter 2 Annex 3 - Accounts Directions

(structure)

2.89 The following table summarises how accounts directions are issued to various

bodies within the DHSC group:

Entity Determination by:

Legislation Accounts Direction made under:

Approved by:

Department of Health and Social Care (own accounts and group consolidation)

HM Treasury Government Accounts and Resources Act 2000, s. 5: Resource Accounts Preparation and s. 7 Other Departmental Accounts

HM Treasury

NHS England (including commissioning sector sub-consolidation)

DHSC (Secretary of State) (SofS)

Health and Social Care Act 2012 c. 7 Schedule 1 s.16: Annual Accounts

HM Treasury

Monitor (own accounts and NHS foundation trust sub-consolidation)

DHSC SofS Consolidated FT accounts (s.17) and Monitor’s own accounts (s.18) Health and Social Care Act 2012 c. 7 Schedule 8: Accounts of NHS foundation trusts

HM Treasury

NHS trusts DHSC SofS NHS trust accounts National Health Service Act 2006 c. 41 Schedule 15: Preparation of annual accounts

HM Treasury

NHS foundation trusts

Monitor Paragraph 24 of Schedule 7 to the National Health Service Act 2006 amended Health and Social Care Act 2012 c. 7 part 4: Governance and management Section 154

Department of Health and Social Care (SofS)

CCGs NHSE and NHSI

Health and Social Care Act 2012 c. 7 Schedule 2 s.17 CCG Annual Report Directions (Chapter A1 of Part 2 of the National Health Service Act 2006 as amended by 14Z15 of the Health and Social Care Act 2012 Reports by clinical commissioning groups).

Department of Health and Social Care (SofS)

DHSC ALBs DHSC SofS HM Treasury

Chapter 2 Annex 4 - NHS Trust Accounts

Directions

2.90 DHSC has issued accounts directions to all NHS trusts, in accordance with

schedule 15 paragraph 3(1) of the National Health Service Act 2006. The text of

this direction is set out below.

2.91 Note the presentation reflects that these directions are incorporated into the

middle of a guidance document.

NATIONAL HEALTH SERVICE ACT 2006 DIRECTIONS GIVEN BY THE SECRETARY OF STATE IN RESPECT OF NATIONAL HEALTH SERVICE TRUSTS’ ACCOUNTS The Secretary of State for Health and Social Care, with the approval of the Treasury, in exercise of powers conferred on him by section 232 of and paragraph 3(1) of Schedule 15 to, and by section 273(1) of the National Health Service Act 2006 gives the following Directions: Commencement and interpretation 1. (1) These Directions are given to English NHS trusts and come into force on the day after the day on which they are signed. (2) In these Directions: “the Accounts” means the accounts of an NHS trust for a given financial year1; “English NHS trust” means an NHS trust all or most of whose hospitals, establishments and facilities are situated in England; “the trust” means the English NHS trust in question. Form of Accounts, including statement of directors' responsibilities 2. (1) NHS trusts are directed as follows. (2) The Accounts submitted under section 232 of and Schedule 15 to the National Health Service Act 2006 must show, and give a true and fair view of, the trust's gains and losses, cash flows and financial state at the end of the financial year. (3) The Accounts must meet the accounting requirements of the Department of Health and Social Care Group Accounting Manual (“the Manual”) as it applies for the relevant financial year, as agreed with the Treasury. (4) Where the Manual requires a statement of directors' responsibilities in respect of the Accounts, this must be signed and dated by the Chief Executive and Finance Director of the trust. Revocation of 2008 Directions

1 “financial year” is defined in section 275 of the National Health Service Act 2006 (c. 41) as “a period of 12 months ending with 31st March in any year”.

3. The Directions entitled “Directions by the Secretary of State in Respect of National Health Service Trusts’ Accounts”, signed on 10th January 2008, are revoked. Signed by the authority of the Secretary of State for Health and Social Care ..................................................................................................... by Christopher Young, a member of the Senior Civil Service, Department of Health and Social Care, 39 Victoria Street, London SW1H 0EU. Dated 23rd March 2018

2.92 A direction to NHS TDA has also been issued regarding the powers conferred by

section 7(1) of the National Health Service Act 2006. The text of this direction is

set out below.

NATIONAL HEALTH SERVICE ACT 2006 Directions to the NHS Trust Development Authority in respect of the Accounts and Annual Reports of NHS Trusts The Secretary of State now gives the following further directions in exercise of powers conferred by section 7(1) of the National Health Service Act 2006: Commencement and interpretation 1. (1) These Directions are given to the NHS TDA and come into force on the day after the day they are signed. (2) In these Directions: “the 2006 Act” means the National Health Service Act 20062; “accounts” means the annual accounts of an English NHS trust prepared under paragraph 3(1) of Schedule 15 to the 2006 Act3; “annual report” means the annual report prepared by an NHS trust under paragraph 12(1) of Schedule 4 to the 2006 Act; “English NHS trust” means an NHS trust all or most of whose hospitals, facilities and establishments are situated in England; “the NHS TDA” means the National Health Service Trust Development Authority4. Functions of the NHS TDA relating to exercise of Secretary of State’s functions in respect of the accounts and annual reports of NHS trusts

2 c. 41 3 The Secretary of State for Health and Social Care has also directed NHS trusts as to the form and content of their accounts. Those Directions were made on 23 March 2018 and can be found via this link: DHSC Group Accounting Manual 4 The National Health Service Trust Development Authority is established by the National Health Service Trust Development Authority (Establishment and Constitution) Order 2012, S.I. 2012/901, amended by S.I. 2013/235 and 2013/260.

2. The Secretary of State directs the NHS TDA to exercise the following functions of the Secretary of State– (a) receiving copies of annual reports sent by English NHS trusts in respect of each financial year under paragraph 12(1) of Schedule 4 to the 2006 Act5; (b) receiving the accounts of NHS trusts in respect of each financial year under paragraph 5(1) of Schedule 15 to the 2006 Act6; and (c) giving directions under paragraph 5(4) of Schedule 15 to the 2006 Act that specify the date, in respect of each financial year, by which accounts must, under paragraph 5(1) of that Schedule, be sent by English NHS trusts7. Signed by the authority of the Secretary of State for Health and Social Care ………...................................................................................................................... Christopher Young, a member of the Senior Civil Service, Department of Health and Social Care, 39 Victoria Street, London SW1H 0EU Dated 6th April 2018

5 This direction, when read with section 275(3) of the 2006 Act, has the effect that the requirement in paragraph 12(1) of Schedule 4 to that Act for NHS trusts to submit their annual reports to the Secretary of State is to be read as a requirement for the submission of those reports to the NHS TDA. The NHS TDA’s website provides information about how reports may be submitted to it: https://improvement.nhs.uk/financialreporting/. 6 This direction, when read with section 275(3) of the 2006 Act, has the effect that the requirement in paragraph 5(1) of Schedule 15 to that Act for NHS trusts to submit their accounts to the Secretary of State is to be read as a requirement for the submission of the accounts to the NHS TDA. The NHS TDA’s website at the link in footnote 5 provides information about how accounts may be submitted to it. 7 See footnote 6 – NHS trusts must send their accounts to the NHS TDA by the date specified in directions made by the NHS TDA in the exercise of the Secretary of State’s function under paragraph 5(4) of Schedule 15 to the 2006 Act.

Chapter 2 Annex 5 - Laying annual report

and accounts before Parliament

2.93 This guidance applies to DHSC group bodies required to lay their annual report

and accounts (ARA) before Parliament. This includes;

• NHS foundation trusts,

• DHSC agencies,

• special health authorities,

• DHSC non-departmental public bodies (NDPBs) and the core department,

2.94 This therefore does not include;

• NHS trusts,

• clinical commissioning groups (CCGs),

• consolidated limited companies or

• NHS charities.

Statutory requirement

2.95 Entities falling within the sectors referred to above are required to lay their ARA,

with any report of the auditor on them, before Parliament.

2.96 Guidance on the form and content of the annual report is included in Chapter 3 of

this manual (except for NHS foundation trusts).

2.97 For NHS foundation trusts, the FT ARM 2021-22 sets out the format of a

foundation trust annual report. This must include the quality report together with

the limited assurance opinion on this report.

2.98 NHS foundation trusts must make themselves familiar with updated or revised

guidance offered in the FT ARM each financial year.

2.99 The ARA laid before Parliament must include the full statutory accounts, not

summarised information, and must be one document.

2.100 Once laid before Parliament the content of the ARA cannot be changed. If

preparing a "glossy" annual report and accounts, this must be the final version,

including all graphics.

2.101 Entities have the discretion, after laying the document before Parliament, to

publish a condensed performance report with supplementary material in lieu of

local publication of the full ARA.

2.102 Further guidance on supplementary material can be found in paragraphs 3.131 to

3.135 of this manual (or in the FT ARM 2021-22, as applicable).

2.103 Until the ARA has been laid before Parliament, nothing can be published. Any

online version must be identical to the printed version.

The process of laying papers before Parliament

2.104 Entities must follow the guidance for laying papers in the House of Commons

Journal Office document Guide to laying papers (August 2017). Note that this

guidance is updated regularly.

2.105 Note also that the Journal Office guidance is aimed at government departments as

well as organisations such as NHS bodies.

2.106 The physical act of laying the report before Parliament can only be undertaken by

the Department of Health and Social Care Parliamentary Clerk, who will also

arrange for laying letters to be prepared.

2.107 More detailed guidance for DHSC group bodies on the requirements for laying

ARAs is available on the DHSC accounting guidance website.

2.108 The submitted ARA will be bound together in a series of reports by the House

authorities and will be stored in perpetuity.

2.109 It is therefore very important that reports are produced in the correct format for

laying in Parliament.

2.110 Reports that are not in the correct format will not be accepted for laying and the

entity may be required to undertake re-printing.

Deadlines for laying documents before Parliament

2.111 All ARAs must be sent to arrive at the Parliamentary Relations Unit to allow

sufficient time for laying before the Parliamentary summer recess.

2.112 The timetable for submission will be confirmed at a later date. For FTs the

timetable for submission will be part of the accounts timetable issued by NHSE

and NHSI.

2.113 ARAs will be welcomed for laying before the submission date. It is the

responsibility of the entity to ensure its ARA is laid.

2.114 Laying reports in good time before the Parliamentary recess ensures that there is

an opportunity for appropriate Parliamentary scrutiny.

Chapter 2 Annex 6 - CCG and NHS Trusts

Annual Audit Reports

2.115 The Code of Audit Practice places a requirement on all CCG and NHS Trust

auditors to issue an annual audit report.

2.116 An annual audit report is intended to be a public document, and CCGs and NHS

Trusts must ensure the document is made available to members of the public free

of charge.

2.117 The annual audit report is separate and distinct from the ISA 260 in which the

auditor reports to those charged with governance, for which there is no

requirement to make publicly available.

2.118 DHSC expects publication on the individual CCG / NHS Trust website to be the

easiest way to ensure the annual audit letter is made available.

2.119 The letter should not be made available prior to publication of the entity’s Annual

Reports and Accounts.

Chapter 2: CCG Appendix 1

2.120 The following additional disclosures are applicable to CCGs.

Performance measures

2.121 NHSE and NHSI issued guidance on reporting CCG performance (“Note 42” in the

CCG_CSU template”). This is reproduced below:

Clinical commissioning groups have a number of financial duties under the National Health

Service Act 2006 (as amended).

The clinical commissioning group’s performance against those duties was as follows:

NHS Act Section

Duty Maximum performance £000s (2021-22 £x)

Duty Achieved?

223H(1)* Expenditure not to exceed income x (x) Y/N

223I(2) Capital resource use does not exceed the amount specified in Directions

x (x) Y/N

223I(3) Revenue resource use does not exceed the amount specified in Directions

x (x) Y/N

223J(1) Capital resource use on specified matter(s)does not exceed the amount specified in Directions

x (x) Y/N

223J(2)

Revenue resource use on specified matter(s) does not exceed the amount specified in Directions

x (x) Y/N

223J(3)

Revenue administration resource use does not exceed the amount specified in Directions

x (x) Y/N

* Note: For the purposes of 223H(1); expenditure is defined as the aggregate of gross expenditure on revenue and capital in the financial year; and, income is defined as the aggregate of the notified maximum revenue resource, notified capital resource and all other amounts accounted as receivable in the financial year (whether under provisions of the Act or from other sources, and included here on a gross basis).

2.122 For items under 223J(1) and 223J(2) provide information on the specified

matter(s) and their individual performance against target, splitting the table

disclosure if need be to highlight items that have breached target separate from

items within target (i.e. disclosing aggregated achievement within target must not

be used to ‘hide’ a breach of target against one or more Direction).

2.123 Disclose the details of any reports that have been issued by the clinical

commissioning group’s auditors.

Points to Note

2.124 Where a clinical commissioning group breaches, or plans to breach, one of the

statutory financial provisions, even if this is agreed with NHSE and NHSI (for

example, setting a deficit budget), local auditors are under a duty to make a report

to the Secretary of State for Health under Section 30 of the Local Audit and

Accountability Act 2014.

2.125 The wording of Section 223H(1) is as follows:

"(1) Each clinical commissioning group must, in respect of each financial

year, perform its functions so as to ensure that its expenditure which is

attributable to the performance by it of its functions in that year does not

exceed the aggregate of:

(a) the amount allotted to it for that year under section 223G

(b) any sums received by it in that year under any provision of this Act

(other than sums received by it under section 223G), and

(c) any sums received by it in that year otherwise than under this Act for

the purpose of enabling it to defray such expenditure."

2.126 Sections 223H(1) and 223G do not distinguish between resources allotted for

capital use and resources allotted for revenue use.

2.127 The amount to be included in the ‘Maximum’ column for the 223H(1) line is

therefore the aggregate of:

(a) the clinical commissioning group’s notified maximum revenue resource use

plus maximum capital resource use

(b) all other sums received in year under other provisions of the Act (and

accounted for in the financial results of the year)

(c) all other income received in year (and accounted for in the financial results of

the year, regardless of whether accounted for gross or net).

2.128 The amount to be included in the ‘Performance’ column for the 223H(1) line is the

aggregate of:

(a) total revenue expenditure (accounted for in the financial results of the year,

regardless of whether accounted for gross or net)

(b) total capital expenditure (accounted for in the financial results of the year).

3. Form and content of the Annual

Report

3.1 This chapter is relevant to all DHSC group bodies except NHS foundation trusts,

who must instead refer to the 2021-22 FT ARM.

Introduction

3.2 DHSC group bodies are required to publish, as a single document, a three-part

annual report and accounts (ARA):

1. The Performance Report, which must include:

• an overview

• a performance analysis.

2. The Accountability Report, which must include:

• a Corporate Governance Report

• a Remuneration and Staff Report

• a Parliamentary Accountability and Audit Report.

3. The Financial Statements

3.3 The structure of the ARA adopted here is the one described in the FReM. DHSC

group bodies may omit headings or sections where they consider that these are

not relevant, but the structure of the three-part ARA outlined in this manual must

be adhered to.

3.4 The structure on an ARA is illustrated in Chapter 3 Annex 1 – Annual Report and

Accounts Outline Structure.

General Principles

3.5 This guidance sets out the minimum content of the ARA.

3.6 Beyond this however, the entity must take ownership of the document and ensure

that additional information is included where necessary to reflect the position of the

body within the community and give sufficient information to meet the

requirements of public accountability.

3.7 Where a DHSC group body has changed status in year, the body must give

additional consideration to the requirements described in paragraphs 4.391 to

4.394 and Chapter 4 Annex 9: Reporting requirements on change of status.

3.8 Part A of the Financial Reporting Manual (FReM) sets out the purposes, principles

and best practice in financial reporting.

3.9 In establishing these, the FReM makes a number of references to the Financial

Reporting Council's July 2018 publication of Guidance on the Strategic Report.

3.10 Reporting requirements expressed in the FReM and GAM apply these principles to

the preparation of annual report and accounts.

3.11 Specific reference is made to the application of the concept of materiality to the

Performance Report and Accountability Report. Unless explicitly permitted, the

concept of materiality cannot be applied to disclosures required:

• By the GAM and consequently the FReM;

• By law or by regulation;

• Promulgated by HM Treasury through PES papers. DHSC Group bodies will receive

updates regarding additional requirements through the FAQ process

3.12 The use of terms such as 'to the extent necessary for an understanding of' or

'principal' identify instances in which materiality judgements can be made in

relation to disclosure requirements within the Performance Report and

Accountability Report.

3.13 Where additional information is provided per paragraph 3.5 preparers should

equally ensure that the disclosure of information meets the principles and

practices as detailed in the FReM in force for the appropriate financial year.

Accounting/Accountable Officer Responsibilities

3.14 The ARA as a whole must be fair, balanced and understandable.

3.15 The Accounting/Accountable Officer takes personal responsibility for it and the

judgments required for determining that it is fair, balanced and understandable.

NHS bodies are not required to comply with the UK Code of Corporate

Governance.

3.16 The DHSC group body must include a Statement of Accounting/Accountable

Officer's Responsibilities within the Accountability Report (see paragraph 3.52).

Additionally, NHS trusts must include a Statement of Directors' Responsibilities.

3.17 The Accounting/Accountable Officer/Chief Executive must sign and date the

following within the ARA to confirm adherence to the reporting framework:

• Performance Report (see paragraphs 3.22 to 3.37 for content)

• Accountability Report, which incorporates the Corporate Governance

Report/Statement (see paragraphs 3.49 to 3.57), the Remuneration and Staff Report

(see paragraphs 3.68 to 3.119) and the Parliamentary Accountability Report (where

applicable, see paragraphs 3.120 to 3.127)

• Statement of Financial Position (see Chapter 5).

CCG Governance

3.18 This manual adopts FReM and Companies Act terminology in references to

“Boards” and “Directors”.

3.19 It is recognised however that CCGs have unique governance arrangements that

are not fully reflected in the core manual.

3.20 All references to Boards or Directors in the following chapter should, for the

purposes of CCGs, be interpreted as governing bodies and governing body

members.

3.21 Further details regarding the application to CCGs is available in Chapter 3 CCG

Appendix 1: Additional Requirements for CCGs, in relation to the status of CCG

governing bodies, governing body members and CCG membership and members.

Performance Report

3.22 The purpose of the performance section of the annual report is to provide

information on the entity, its main objectives and strategies and the principal risks

that it faces.

3.23 The requirements of the performance report are based on the matters required to

be dealt with in a Strategic Report as set out in Chapter 4A of Part 15 of the

Companies Act 2006, as amended by SI 2013 No.1970, The Companies Act 2006

(Strategic Report and Directors’ Report) Regulations 2013.

3.24 Public entities must comply with the Act as adapted: i.e. they must treat

themselves as if they were quoted companies.

3.25 The performance report is required to have two sections: a 'performance overview'

and a 'performance analysis'.

3.26 The report must be fair, balanced and understandable. Infographics and visual

aids should be used where they can enhance users understanding of the report.

3.27 For NHS trusts, performance of the organisation in both the overview and

performance analysis should cover all aspects of performance and not only

financial. This should include delivery against quality improvement priorities and

performance against the most pertinent indicators for the Trust in the NHS

Oversight Framework. Linkage should be made to disclosures on quality

governance and data quality included in the accountability report.

3.28 The performance report shall be signed and dated by the Accounting/Accountable

Officer/Chief Executive.

3.29 Auditors will review the performance report for consistency with other information

in the financial statements.

3.30 Auditors are required to read the information in the annual report and refer to this

in their audit report.

3.31 Therefore, the draft annual report must be submitted to the auditor to allow them

sufficient time to do this prior to signing their opinion on the accounts.

Performance overview

3.32 The purpose of the performance overview is to give the user a short (no more than

10 to 15 pages) summary that provides them with sufficient information to

understand the organisation, its purpose, the key risks to the achievement of its

objectives and how it has performed during the year.

3.33 The overview should be enough for the lay user to have no need to look further

into the rest of the ARA unless they were interested in further detail or had specific

accountability or decision-making needs to be met.

3.34 As a minimum, the overview must include:

• A short summary explaining the purpose of the overview section

• a statement from the chief executive providing their perspective on the performance of

the organisation over the period

• a statement of the purpose and activities of the organisation, including a brief

description of the business model and environment, organisational structure,

objectives and strategies.

• a performance appraisal which provides a synopsis of the performance analysis

discussed in paragraph 3.35 and an assessment of the entity's progress towards

delivering its objectives. An assessment should cover;

• whether performance has met expectation and provision of explanations where

this is not the case,

• the key issues and risks that could affect the entity in delivering its objectives and

affect its future performance and plans. The description of the risks should be

sufficiently specific that it is easily understood why they are important,

• how the risks have been managed and how the risks have changed through the

period. Significant changes should be highlighted and explained with reference to

where relevant disclosures have been made elsewhere in the ARA such as the

accountability report or performance report.

• an explanation of the adoption of the going concern basis (see paragraphs 4.18 to

4.27) where this might be called into doubt (expected in extremely limited

circumstances as, for instance, the issue of a report under Section 30 of the Local

Audit and Accountability Act 2014 for a CCG or an NHS provider, or the demise of an

NHS body where service provision continues, will not call going concern into doubt).

• Where a trust hosts a Nightingale facility, whilst these arrangements will be immaterial

to the financial statements, as trusts either make no or peppercorn payments, it is

material by nature to the users of the accounts, therefore requiring adequate

explanation of the arrangement. As such trusts must disclose;

• The nature of the hosting arrangement, such as when the facility was established

and its maximum occupancy, and,

• pertinent detail regarding the impact of hosting the facility as disclosed in the trusts

Provider Finance Return forms.

Performance analysis

3.35 The purpose of the performance analysis is for entities to provide a detailed

performance summary of how their entity measures its performance, more detailed

integrated performance analysis and long-term expenditure trend analysis where

appropriate.

3.36 It is expected to provide a cohesive and consistent understanding of performance

from across the ARA.

3.37 As a minimum, the performance analysis must include:

• A short explanation of the purpose of the section and its structure.

• Information on how the entity measures performance i.e. what the entity sees as its

key performance measures, how it checks performance against those measures, and

narrative to explain the link between KPIs, risk and uncertainty.

• A more detailed analysis and explanation of the development and performance of the

entity during the year and an explanation of the relationships and linkages between

different pieces of information. This analysis is required to include a financial review

which will utilise a wide range of data including key financial information from the

financial statements section of the accounts. Trend data presenting balance sheet

movements for assets and liabilities and detail on the type of spend incurred (on

employees, equipment or buildings) are considered best practice items to include in

such a financial review.

• Further detail on the risk profile of the organisation, expanding on the summary offered

in the performance overview, to describe;

• how risks have affected the organisation achieving its objectives

• how such risks have been mitigated

• how such mitigation may affect future performance and plans

• significant changes in risks, including their likelihood and impact

• new and emerging risks

• how both existing and new risks could affect performance and delivery of plans in

future years.

• Non-financial information, including social matters, respect for human rights, diversity,

anti-corruption and anti-bribery matters.

• A summary of how equality of service delivery to different groups has been

promoted through the organisation should be considered as part of a best practice

disclosure. This is a mandatory disclosure requirement for NHS bodies regardless

of whether a performance analysis is omitted from the Performance Report.

Disclosure may include, cross referencing separate publications that contain such

information, or provision of information regarding:

• How the entity has had due regard to the aims of the public sector equality

duty where applicable.

• Customer satisfaction scores broken down by protected characteristics where

collected.

• Performance against equality of service delivery KPIs and metrics if

applicable.

• Explanations of activities the entity is undertaking to promote equality of

service delivery.

• Information on environmental matters, including the impact of the entity’s business on

the environment. Reporting entities are expected to report annually on sustainability

matters. Reporting requirements can be met by following the guidance and standard

reporting format for NHS bodies produced by the Sustainable Development Unit. It is

envisaged that reporting entities will produce a report that will be integral, with

reference throughout the annual report and accounts and not a separate standalone

report.

• Performance on other matters raised during the year (for example, in Treasury PES

papers): DHSC will notify group bodies of such additional requirements in FAQs.

3.38 Entities should include the following information on a comply or explain basis, if

not captured in meeting the minimum requirements of the performance overview

or analysis:

• Further detail on the structure of the organisation unless sufficient detail is already

provided in the annual report.

• If unit costs are central to decision making or the accountability functions of the entity

they should be disclosed where permissible. Disclosure should include assumptions

employed to derive calculations and should be maintained to enable meaningful

comparison across periods.

• Where data is disclosed without trend data the reason for its absence should be

disclosed. This can include reasons such as this being the first year data is available

for instance.

• In the financial review offered in the performance analysis, key financial indicators or

measures should be employed in the broader discussion of an entity's performance.

This can also include the identification of where effective or ineffective use of

resources has contributed to meeting or failing to meet objectives.

• Detail in relation to future plans and expected future performance if not captured as

part of the trend analyses provided in the performance analysis.

• A summary or reference to any accountability issues or breaches outlined in the

accountability report, worth drawing to the attention of users. Detail from the

accountability report should not be duplicated here.

3.39 Entities should also consider how the following information could be incorporated

into their performance analysis to incorporate 'best practice recommendations' per

the FReM:

• context and explanation of the budgeting framework with any key terms being defined

• a summary of outturn to accounts reconciliation

• A trend analysis showing spend in the budgeting currencies that are relevant to the

entity (for example RDEL, CDEL, RAME, CAME, Capital Resource Limit, breakeven

duty, 'adjusted financial performance' etc.) over the previous 5 years and future

projections where available.

3.40 The FReM establishes that disclosing several years of trend data is best practice

and that five years is a positive target to attain for reporting purposes.

3.41 Entities should ensure that trend data employed helps establish the context of the

data. This means that the length of trend may appropriately vary by entity and

performance indicator.

3.42 Clear explanations of the employment of trend data over an appropriately judged

period will assist the users understanding of information disclosed.

The Accountability Report

Scope of the Accountability Report

3.43 The purpose of the accountability section of the annual report is to meet key

accountability requirements to Parliament.

3.44 The requirements of the Accountability Report are based on the matters required

to be dealt with in a Directors’ Report, as set out in Chapter 5 of Part 15 of the

Companies Act 2006 and Schedule 7 of SI 2008 No.410, The Large and Medium-

sized Companies and Groups (Accounts and Reports) Regulations 2008, and in a

Remuneration Report, as set out in Chapter 6 of the Companies Act 2006 and

Schedule 8 of SI 2013 No 1981, The Large and Medium-sized Companies and

Groups (Accounts and Reports) (Amendment) Regulations 2013.

3.45 The requirements of the Companies Act 2006 have been adapted for the public

sector context and only need to be followed by entities which are not companies to

the extent that they are incorporated into this manual.

3.46 Auditors will review the Accountability Report for consistency with other

information in the financial statements and will provide an opinion on the following

disclosures which must clearly be identified as audited within the Accountability

Report:

• disclosures on Parliamentary accountability, as detailed in paragraph 3.124

• single total figure of remuneration for each director

• CETV disclosures for each director

• payments to past directors, if relevant

• payments for loss of office, if relevant

• “fair pay” (pay multiples) disclosures

• exit packages, if relevant, and

• analysis of staff numbers and costs.

3.47 The Accountability Report is required to have three sections:

• a Corporate Governance Report

• a Remuneration and Staff Report

• a Parliamentary Accountability and Audit Report.

3.48 DHSC group bodies must provide a short overview of these sections and explain

how they help deliver accountability to Parliament (where relevant) and embody

best practice to comply with corporate governance norms and codes.

Corporate governance report

3.49 The purpose of the corporate governance report is to explain the composition and

organisation of the entity’s governance structures and how they support the

achievement of the entity’s objectives.

3.50 As a minimum, the Corporate Governance Report must include:

• the directors’ report (members’ report for CCGs)

• the statement of Accounting/Accountable Officer's responsibilities

• the governance statement.

The directors’/members’ report

3.51 The directors’/members’ report must include the following, unless disclosed

elsewhere in the ARA, in which case a cross-reference may be provided:

• the names of the chair and chief executive, and the names of any individuals who

were directors of the entity at any point in the financial year and up to the date the

ARA was approved

• the composition of the board of directors (including advisory and non-executive

members) having authority or responsibility for directing or controlling the major

activities of the entity during the year

• the names of the directors forming an audit committee or committees (recommended)

• the details of company directorships and other significant interests held by members of

the management board which may conflict with their management responsibilities

(where a register of interests is available online, a web link may be provided instead of

a detailed disclosure in the annual report)

• information on personal data related incidents where these have been formally

reported to the information commissioner’s office

• (NHS bodies) a statement to the effect that each director: knows of no information

which would be relevant to the auditors for the purposes of their audit report, and of

which the auditors are not aware, and; has taken “all the steps that he or she ought to

have taken” to make himself/herself aware of any such information and to establish

that the auditors are aware of it.

Statement of Accounting/Accountable Officer’s responsibilities

3.52 The Accounting/Accountable Officer must explain his/her responsibility for

preparing the financial statements.

3.53 The Accounting/Accountable Officer is required to confirm that, as far as he or she

is aware, there is no relevant audit information of which the entity’s auditors are

unaware, and the Accounting Officer has taken all the steps that he or she ought

to have taken to make himself or herself aware of any relevant audit information

and to establish that the entity’s auditors are aware of that information.

3.54 The Accounting/Accountable Officer is required to confirm that the ARA as a whole

is fair, balanced and understandable and that he or she takes personal

responsibility for the ARA and the judgments required for determining that it is fair,

balanced and understandable.

3.55 NHSE and NHSI issues model statements of Accounting / Accountable Officer

Responsibilities for use by NHS Foundation Trusts and NHS Trusts. NHSE and

NHSI also issues an annual report template on SharePoint for CCGs to utilise.

3.56 Other DHSC group bodies may wish to consider the model statements offered in

the Annexes of the FReM as appropriate to their entity.

Governance statement

3.57 In preparing the statement, the Accounting/Accountable Officer should reflect the

particular circumstances in which the entity operates.

3.58 NHS trusts must follow guidance to be issued by NHSE and NHSI. CCGs must

follow the template and guidance published via the NHSE and NHSI/CCG

SharePoint

3.59 The FReM expresses the following as minimum requirements the statement

should acknowledge and explain:

• responsibilities for risk management and internal control systems and for reviewing

their effectiveness

• the on-going process and structures used to identify, evaluate and manage the

principal and emerging risks faced, cross referencing to the performance report where

appropriate.

• that the systems have been in place for the year under review and up to the date of

approval of the annual report and accounts

• the main features that support regular monitoring, review and assurance

• the process applied in reviewing the effectiveness of the system of risk management

and internal control, including explaining what actions have been or are being taken to

remedy any significant failings or weaknesses. Where this information has been

disclosed elsewhere in the annual report and accounts, a cross-reference to where

that information can be found will suffice; and

• the extent to which arrangements comply with requirements for specific sectors and

jurisdictions governed by the Relevant Authorities per paragraph 3.57, such as the

central government Corporate Governance Code and the Orange Book, with

explanations of any departures.

• Exceptionally, where information is not reported due to issues regarding accuracy,

reliability, or collection itself, this should be acknowledged. The steps being taken to

improve data and disclosure, as well as when reliable data will be made available,

need to be identified.

Modern Slavery Act 2015 – Transparency in Supply Chains

3.60 The Modern Slavery Act 2015 establishes a duty for commercial organisations

with an annual turnover in excess of £36 million to prepare an annual slavery and

human trafficking statement.

3.61 This is a statement of the steps the organisation has taken during the financial

year to ensure that slavery and human trafficking is not taking place in any of its

supply chains or in any part of its own business.

3.62 Income earned by NHS bodies from government sources, including CCGs and

local authorities, is considered to be publicly funded and is therefore outside the

scope of these reporting requirements.

3.63 Where NHS bodies engage in profit-making activities, these may still be sufficient

to trigger the reporting requirements. This is likely to be the case where income is

earned from non-government sources, such as private patients, and where this

income exceeds £36 million in total.

3.64 It is ultimately for individual NHS bodies to consider whether they have activities

that require them to be treated as a commercial organisation for the purpose of the

Modern Slavery Act 2015, and to produce the required statement accordingly.

3.65 The Home Office have produced a practical guide on applying the reporting

requirements, Transparency in Supply Chains etc. a practical guide.

3.66 Note that, where a slavery and human trafficking statement is required, the Act

specifies that entities must publish this on their website if they have one.

3.67 It is not a mandatory requirement to include the statement in an entity’s ARA, but

DHSC group bodies may nevertheless choose to do so.

Remuneration and staff report

3.68 The remuneration and staff report sets out the organisation’s remuneration policy

for directors and senior managers, reports on how that policy has been

implemented and sets out the amounts awarded to directors and senior managers

and where relevant the link between performance and remuneration.

3.69 In addition, the report provides details on remuneration and staff that users of the

accounts see as key to accountability.

3.70 Group bodies should consider where the inclusion of narrative, to define the scope

of the information being disclosed, would assist users in this respect.

'Group' basis of preparation

3.71 The remuneration report must disclose information on those persons in senior

positions having authority or responsibility for directing or controlling major

activities within the group body.

3.72 This means those who influence the decisions of the entity as a whole rather than

the decisions of individual directorates or departments.

3.73 It is important for individual entities to consider the 'group' basis of the scope

governing the above requirement.

3.74 The Companies Act 2006, Part 15 Chapter 5, confirms the group perspective to be

employed for the directors' report. This perspective is equally relevant to the

determination as to which senior management influence the entity as a whole.

3.75 The chief executive or Accounting/Accountable Officer must be asked to confirm

whether this covers more than the executive and non-executive directors (for

CCGs – attendees at Governing Body meetings).

3.76 It is usually considered that the regular attendees of the entity’s board meetings

are its senior managers.

3.77 The 'group' basis of preparation may also have an impact on the nature of the

disclosure required regarding the individual's qualifying services as detailed in

paragraph 3.151(v).

Staff sharing scenarios

3.78 For staff-sharing arrangements, the remuneration report must include

remuneration details showing the entity’s share of the relevant components of

remuneration, for those senior managers holding a position in the entity..

3.79 In addition, the senior manager’s total salary (across all organisations they are

engaged by) must be shown separately.

3.80 Where such additional information is separately presented, entities should

carefully consider how best to disclose this detail in a transparent and informative

manner, enabling users to effectively hold entities to account.

GDPR considerations

3.81 There is a presumption that information about named individuals will be given in all

circumstances and all disclosures in the remuneration report will be consistent with

identifiable information of those individuals in the financial statements.

3.82 Individuals must be advised in advance of the intention to disclose information

about them, with an invitation for sight of the intended information to be published

and notification that the individual can object under Article 21 of GDPR.

3.83 If a member does not agree to disclosure, the entity must consider whether to

accept non-disclosure.

3.84 Under such circumstances the GDPR requires the entity to demonstrate

compelling legitimate grounds for the disclosure which override the interests, rights

and freedoms of the member or for the establishment, exercise or defence of legal

claims.

3.85 Entities are strongly advised to take legal advice in such a case, because a

decision not to publish may be challenged under the Freedom of Information Act.

Where non-disclosure is agreed, the fact that disclosure has been omitted should

be disclosed.

Subject to Audit

3.86 Certain information is auditable and will be referred to in the audit opinion. The

report must be annotated to identify those items that are auditable.

Relationship between the remuneration report and exit packages, severance

payments and off-payroll engagements disclosures

3.87 In many cases, individuals who fall to be named in the remuneration report will

also be included, although not individually identified by name, in the exit packages,

non-compulsory departures or off-payroll engagements disclosures.

3.88 Where this is the case, the remuneration report must provide the details of those

agreements or payments on an individual by individual basis in a way that permits

the user to cross-reference remuneration report data to that in the wider notes to

the accounts.

Remuneration policy

3.89 Entities must disclose their policy on the remuneration of directors for the current

and future years.

Remuneration of Very Senior Managers (VSMs) – CCGs only

3.90 Where one or more senior managers of a CCG are paid more than £150,000 per

annum, the remuneration report must explain (not necessarily on an individual

basis) the steps the CCG has taken to satisfy itself that this remuneration is

reasonable.

3.91 Pay for a part time senior manager must be compared against a pro rata of

£150,000. For this disclosure, ‘pay’ should be considered to be columns (a), (b),

(c) and (d) of the ‘single total figure table’ in the remuneration report (see Chapter

3 Annex 2 - Salary and Pension disclosure tables: information subject to audit).

3.92 A similar disclosure applies to NHS foundation trusts, set out separately in the FT

ARM 2021-22.

Remuneration Report Tables

3.93 The tables for use as part of the remuneration report (the Single Total Figure, and

Pension Entitlement tables) are ‘Table 1: Single total figure table’ and ‘Table 2:

Pension Benefits’.

3.94 These are reproduced with further guidance offered in Chapter 3 Annex 2 - Salary

and Pension disclosure tables: information subject to audit.

3.95 The figures relate to all those individuals who hold or have held office as a senior

manager of the DHSC group body (CCGs – member of the Governing Body)

during the reporting year or in the prior period.

3.96 If an individual is seconded into the organisation at no cost to the organisation,

disclose the arrangement. It is irrelevant that:

• an individual was not substantively appointed (holding office is sufficient, irrespective

of defects in appointment), or an individual's title as senior manager included a prefix

such as "temporary" or "interim", or

• an individual was engaged via a corporate body, such as an agency, and payments

were made to that corporate body rather than to the individual directly.

3.97 It is a requirement to disclose explanations of any significant awards made to past

senior managers.

3.98 Calculations in the single total figure table (notably in column “e” – all pensions

related benefits) may return negative values. Negative figures must not be shown

in any columns in the table: a zero must be substituted.

3.99 The only exception to this relates to instances of a recovery or withholding of sums

in the current financial year, in respect of amounts disclosed in the remuneration

report for a previous financial year.

3.100 In such instances the negative value should be shown in a separate additional

column subtracted from the 'total' column and explanation given in a note to the

table.

3.101 CCG pension disclosures relating to GPs serving on the Governing Body are

discussed in Chapter 3 CCG Appendix 2 – Pension Disclosures, including tables

to demonstrate how the pensions disclosure of governing body members should

be disclosed.

Compensation on early retirement or for loss of office

3.102 If a payment for compensation on early retirement or for loss of office (paid or

receivable) has been made under the terms of legislation or an approved

Compensation Scheme, the fact that such a payment has been made must be

disclosed, including a description of the compensation payment and details of the

total amounts paid (the cost to be used must include any top-up to compensation

provided by the employer to buy out the actuarial reduction on an individual’s

pension).

Payments to past directors

3.103 DHSC group bodies must provide details of any payments made to any person

who was not a director at the time the payment was made, but who had been a

director of the entity previously, unless already disclosed within a previous

remuneration report, the current year single total remuneration disclosure or within

the disclosure of compensation for early retirement or loss of office.

3.104 Only payments of regular pension benefits which commenced in previous years

and payments in respect of employment for the entity other than as a director may

be excluded.

Fair Pay Disclosure

3.105 Entities are required to disclose pay ratio information and detail concerning

percentage change in remuneration concerning the highest paid director. The

specific disclosure requirements are described in paragraphs 3.107 to 3.118.

3.106 Where the disclosure requirement is new for 2021-22, the requirement to provide a

prior year comparative is best practice rather than mandatory. This is identified in

the description of the disclosure requirements below.

Percentage change in remuneration of highest paid director

3.107 For the single total figure table components:

• Salary and allowances

• performance pay and bonuses

• all taxable benefits,

3.108 Entities are required to disclose separately for each single total figure table

component:

(a) The percentage change from the previous financial year in respect of the

highest paid director, and,

(b) The average percentage change from the previous financial year in respect of

employees of the entity, taken as a whole.

3.109 Two percentage figures will therefore be provided for each single total figure

component detailed in paragraph 3.107, giving a total of six percentages to be

disclosed for each financial year under this requirement.

3.110 Prior year comparatives for each percentage change are required to be given in

every year after 2021-22, with 2021-22 being the first year for which this disclosure

is made, thus making prior year comparatives best practice than mandated.

3.111 Entities should provide context regarding the percentage figures disclosed, to help

users of the accounts understand percentages disclosed. This may assist entities

where comparisons are not straightforward

Pay ratio information

3.112 Entities are required to disclose:

• the 25th percentile, median and 75th percentile of remuneration of the reporting

entity’s staff (based on annualised, full-time equivalent remuneration of all staff

(including temporary and agency staff) as at the reporting date)

• the 25th percentile, median and 75th percentile of the salary component of

remuneration of the reporting entity’s staff (based on annualised, full-time equivalent

remuneration of all staff (including temporary and agency staff) as at the reporting

• the range of staff remuneration

• separate ratios for the 25th percentile, median and 75th percentile of staff

remuneration against the mid-point of the banded remuneration of the highest paid

director, for which an illustrative table is provided below which identifies the derivation

of the pay ratio and the nature of the prior year comparative.

Year 25th percentile pay ratio

Median pay ratio 75th percentile pay ratio

202x-2x X:1 (X being the

mid-point of highest

paid director/25th

percentile of

employee

remuneration)

Y:1 (Y being the

paid director/50th

percentile of

employee

remuneration)

Z:1 (Z being the

paid director/75th

percentile of

employee

remuneration)

202x-2x X:1

(Prior year

comparative is best

practice for 2021-

(Prior year

comparative is

mandatory)

(Prior year

comparative is best

practice for 2021-

• an explanation for any significant changes in the ratio between the current and prior

years.

3.113 All DHSC group bodies must include a narrative highlighting the reasons for any

variance in year-on-year ratios in order to:

• describe the purpose of including the ratios, and what they mean

• ensure transparency in executive remuneration

• allow the public to hold government to account for their use of public funds

• provide an opportunity for entities to monitor their own remuneration and note any

adverse or anomalous trends.

3.114 The narrative should be concise and clearly linked to the figures disclosed in the

remuneration report and use terms that are easily understandable by the public.

The narrative must be introduced by the following text:

“Reporting bodies are required to disclose the relationship between the

remuneration of the highest-paid director / member in their organisation

against the 25th percentile, median and 75th percentile of remuneration of

the organisation’s workforce. Total remuneration is further broken down to

show the relationship between the highest paid director's salary

component of their total remuneration against the 25th percentile, median

and 75th percentile of salary components of the organisation’s workforce.

The banded remuneration of the highest paid director / member in [the

organisation] in the financial year 202x-2x was £xx (202x-2x, £xx). The

relationship to the remuneration of the organisation's workforce is

disclosed in the below table.

Year 25th percentile total remuneration ratio

25th percentile Salary ratio

Median total remuneration ratio

Median salary ratio

75th percentile total remuneration ratio

75th percentile salary ratio

X:1 (X being

the mid-

point of

highest paid

director/25th

percentile of

employee

remuneratio

See left

derivation

but on

salary only

Y:1 (Y being

the mid-

point of

highest paid

director/50th

percentile of

employee

remuneratio

See left

derivation

but on

salary only

Z:1 (Z being

the mid-

point of

highest paid

director/75th

percentile of

employee

remuneratio

See left

derivation

but on

salary only

(Prior year

comparative

is best

practice for

2021-22)

(Prior year

comparativ

e is best

practice

for 2021-

(Prior year

comparative

mandatory)

(Prior year

comparativ

e is best

practice

for 2021-

(Prior year

comparative

is best

practice for

2021-22)

(Prior year

comparativ

e is best

practice

for 2021-

In 202x-2x, xx (202x-2x, xx) employees received remuneration in excess

of the highest-paid director / member. Remuneration ranged from £xx to

£xx (202x-2x £xx-£xx).

Total remuneration includes salary, non-consolidated performance-related

pay, benefits-in-kind, but not severance payments. It does not include

employer pension contributions and the cash equivalent transfer value of

pensions.”

3.115 It must then be followed by a concise and factual explanation of the changes on

either side of the ratio, taking into account where relevant:

• any adjustment to the number or composition of the general workforce (for example,

through restructuring, downsizing and outsourcing)

• any change to the remuneration of the most highly paid individual. Entities should

note that this may not necessarily be an increase to base pay, but a change in taxable

expenses or allowances. Where the allowance is temporary (for example, relocation

allowance), entities must note this and its likely impact on the pay multiple

• any change of the most highly paid individual (for example, a new appointment, or the

previously highest paid post having been vacated and/or eliminated)

• any impact of a pay freeze on the ratio (for example, senior pay freeze that does not

affect the majority of staff.)

• whether and if so why, the entity believes the median pay ratio for the relevant

financial year is consistent with the pay, reward and progression policies for the

entity's employees taken as a whole.

3.116 The above list is not exhaustive and should be treated only as general guidance.

It is not intended to act as a checklist of justification for higher ratios.

3.117 Where there is a sharing arrangement, it is cost to the entity of an individual that

identifies them as “highest paid” and not the total of that individual’s remuneration.

Termination benefits must be excluded from the calculation of the highest-paid

director’s / member’s salary to avoid distorting the ratio.

3.118 Annex 4 of the FReM cites the Hutton Review of Fair Pay - Implementation

Guidance as additional guidance for this disclosure requirement. Preparers

should note that the presentation of the disclosure as described in the Hutton

Review guidance has now been superseded.

Staff report

3.119 The staff report must include the following information:

(a) Where applicable, the number of senior civil service staff (or senior managers)

by band.

(b) Staff numbers and costs – entities must provide an analysis of staff numbers

and costs, distinguishing between ‘permanently employed’ staff and ‘other’

staff, which must state that the figures are subject to audit (see paragraph

3.46). In this context:

• ‘Permanently employed’ refers to members of staff with a permanent (UK) employment

contract directly with the entity

• ‘Other’ refers to any staff engaged on the objectives of the entity that does not have a

permanent (UK) employment contract with the entity. This includes employees on

short term contracts of employment, agency/temporary staff, locally engaged staff

overseas, and inward secondments from other entities where the whole or majority of

the employees’ costs are met locally.

• In addition, DHSC only, is required to provide a further breakdown of benefits incurred

under two additional categories (ministers and special advisors).

(i) The figures must exclude non-executive directors/ lay Governing Body

Members but include executive board members/Governing Body Members

and staff recharged by other DHSC group bodies.

(ii) The analysis of staff costs must additionally report by the accounts

headings set out in paragraph 5.58.

(iii) The analysis of staff numbers must additionally report by the functional

categories of employees defined in NHS Digital’s NHS Occupation Code

Manual.

(iv) The average number of employees is calculated as the whole time

equivalent number of employees under contract of service in each week in

the financial year, divided by the number of weeks in the financial year.

The “contracted hours” method of calculating whole time equivalent

number must be used, that is, dividing the contracted hours of each

employee by the standard working hours.

(v) To note: Staff on outward secondment must not be included in the

average number of employees.

(c) Staff composition – Entities must provide an analysis of the number of persons

of each sex who were directors, senior civil servants (or equivalent) and

employees of the entity.

(d) Sickness absence data - NHS bodies are required to report on staff sickness.

The information is also required on the summarisation schedules for

consolidation purposes and will be issued by DHSC after draft accounts

submission.

(e) Staff turnover percentage - applying the Cabinet Office (CO) guidance for

calculating turnover in the civil service on a comply or explain basis.

(i) A turnover percentage therefore should be provided, but the derivation of

the percentage per the CO guidance is on a comply or explain basis.

(ii) Information should be provided with sufficient explanation, context,

including trend data and or caveats where appropriate.

(iii) HM Treasury have confirmed that no new data collections need to be

developed in meeting this disclosure requirement.

(iv) Entities whose staff turnover is captured as part of NHS Digital's NHS

workforce statistics should refer and provide a link to, than duplicate, the

data disclosed in that series. Sufficient explanation to aide user

understanding of the data should be provided. This should include that

the series is an official statistics publication complying with the UK

Statistics Authority's Code of Practice.

(f) For those entities who contribute to it, staff engagement percentage scores

from the latest Civil Service People Survey. Entities that do not participate in

the Civil Service People Survey should provide similar indicators where

possible, ensuring sufficient explanation and context, including trend data is

provided where appropriate. The NHS Staff Survey would be an appropriate

equivalent survey for NHS bodies to refer to.

(g) Staff policies applied during the financial year:

(i) for giving full and fair consideration to applications for employment made

by disabled persons, having regard to their particular aptitudes and

abilities

(ii) for continuing the employment of, and for arranging appropriate training

for, employees who have become disabled persons during the period

when they were employed

(iii) otherwise for the training, career development and promotion of disabled

employees.

(iv) As a best practice recommendation, but mandatory for NHS bodies,

entities should include details regarding their diversity and inclusion

policies, initiatives and longer term ambitions. Disclosure may include

cross referencing separate publications that contain such information, or

provision of information regarding:

• How policies and activities undertaken in the year have or will improve the

diversity and inclusiveness of the workforce.

• Whether the entity has identified any barriers to improving the diversity of its

workforce and if so, what actions the entity has or will put in place.

• Changes in staff composition impacting on the diversity and inclusiveness of

the workforce, including appropriate trend data.

• Performance against internal targets set in relation to diversity and

inclusiveness of the workforce if applicable.

(h) Trade Union Facility Time Reporting Requirements - Entities in scope of the

Trade Union (Facility Time Publication Requirements) Regulations 2017,

which took effect from 1 April 2017, are required to publish detail as prescribed

by the Statutory Instrument (SI) in their ARA.

(i) The regulations and subsequent disclosure apply to those entities listed in

schedule 1 part 2 and part 5 of the regulations that are an employer with at

least one trade union representative and has more than 49 full time

equivalents during any seven, of the twelve-month relevant period (1st

April to 31st March).

(ii) Disclosure would not be required if the period of the annual report for a

demising trust is less than seven months.

(iii) Entities should note that legal titles, rather than operating titles are

employed in the schedule. For instance, the Health and Social Care

Information Centre is referenced rather than its trading name of NHS

Digital.

(iv) Whilst the majority of Group bodies are in scope, it is a deliberate act on

the part of the regulations to exclude advisory bodies, expert panels and

bodies with a predominantly commercial focus.

(v) Per the Cabinet Office guidance on facility time publication offered to

assist preparers in meeting the ARA and wider reporting requirements,

disclosure can be made in the form prescribed by the SI in the staff report,

or can be referenced in the staff report and then disclosed fully and in the

prescribed form, in an annex to the ARA.

(vi) Schedule 2 of the regulation and Annex A of the Cabinet Office guidance

provide the prescribed layout for the disclosure under this regulation. No

disclosures are required for prior periods

(i) Other employee matters – other diversity issues and equal treatment in

employment and occupation; employment issues including employee

consultation and/or participation; health and safety at work; trade union

relationships; and human capital management such as career management

and employability, pay policy etc.

(j) Expenditure on consultancy (see Chapter 5 Annex 2: Consultancy definition)

(k) Off-payroll engagements – Treasury requires public sector bodies to report

arrangements whereby individuals are paid through their own companies (and

so are responsible for their own tax and NI arrangements).

(i) Model templates along with further guidance on “Off-payroll” disclosures

can be found in Chapter 3 Annex 4 – “Off payroll” engagements.

(ii) The report must state whether there are, or are not, engagements to

report under this heading (i.e. a NIL return is required).

(l) Exit packages – The figures to be disclosed here relate to exit packages

agreed in the year. The actual date of departure might be in a subsequent

period, and the expense in relation to the departure costs may have been

accrued in a previous period. The data here is therefore presented on a

different basis to other staff cost and expenditure notes in the accounts. The

disclosure must state that the figures are subject to audit (see paragraph

3.46).

(i) HM Treasury has issued specific guidance on severance payments (i.e.

covering any payments that are not made under either legal or contractual

obligation): this is now included in HM Treasury’s Managing Public Money.

Special severance payments when staff leave a public sector employer

should only rarely be considered. They will always require HM Treasury

approval because they are usually novel, contentious and potentially

repercussive: NHS bodies have no delegated authority to make such

payments unless so approved.

(ii) Model templates can be found in Chapter 3 Annex 3 – Exit packages and

severance payments.

Parliamentary accountability and audit report

3.120 The Parliamentary accountability and audit report is a requirement for those

entities that report directly to Parliament. It is therefore also required in the

consolidated DHSC annual report.

3.121 Entities that do not produce a Parliamentary accountability report must

nevertheless include an audit certificate and report.

3.122 DHSC group bodies that are not required to produce a Parliamentary

accountability report may include these disclosures within the annual report.

3.123 Where an entity elects not to do this, it must include the disclosures on remote

contingent liabilities, losses and special payments, gifts, and fees and charges as

notes within its financial statements.

3.124 There will be a need to collect data for the consolidated account via the

summarisation schedules to assist the completion of this report.

3.125 Therefore, regardless of applicability of this report, all DHSC group bodies must

ensure the summarisation schedule is completed.

3.126 The Parliamentary Report will contain disclosures on the following (as outlined in

the FReM Chapter 6), which must be stated as being subject to audit:

*Guidance on the reporting requirements for contingent liabilities, including those too remote to require disclosure under IAS 37 but which must nevertheless be reported to Parliament, can be found in Managing Public Money and within the Contingent Liability Approval Framework published by HM Treasury. ** Refers to losses and special payments where the total amounts incurred are over the limits prescribed in Managing Public Money (£300k) In the case of reporting on special payments which are severance payments, the detail to be disclosed must include the number of special severance payments made, the total amount paid out, and the maximum (highest), minimum (lowest) and median values of payments made. (An entity must disclose where some of the required detail is excluded due to the reporting of special severance payments conflicting with a legal obligation arising as a result of the Data Protection Act 2018, or otherwise.) *** In line with the guidance in Managing Public Money Annex 4.12, DHSC group bodies must report on the total value of gifts made, if this exceeds £300k, and provide details of any individual gifts over £300k. DHSC group bodies are not expected to make gifts in the normal course of business, and must contact their national body or DHSC sponsor division in the first instance.

Requirement

Sector

DHSC DHSC ALBs NHS trusts CCGs

Statement of Parliamentary Supply Mandatory N/A N/A N/A

Name of public sector bodies outside boundary where department has lead policy responsibility

Mandatory N/A N/A N/A

Brief description of material remote contingent liabilities (under Parliamentary reporting requirements not IAS 37) and estimate of its financial effect*

Mandatory Mandatory Optional (para.3.122)

Optional (para3.122.)

An explanation of the regularity of expenditure

Mandatory Mandatory Optional Optional

A statement is required if cost allocation and charging requirements set by HMT have not been complied with

Public Sector Information Holders only

N/A N/A

A statement of losses and special payments over £300k**

Mandatory Mandatory Optional (para.3.122)

Optional (para 3.122)

Notation of gifts made over a value of £300k (per Managing Public Money annex 4.12 – note these require HMT approval)***

Mandatory Mandatory Optional (para 3.122)

Analysis of material (>£1m) fees and charges income. This must include: 1) the financial objective(s) and performance against the objectives; 2) the full cost and unit costs charged in year; 3) the total income received in year; 4) the nature/extent of any subsidies or overcharging

Mandatory Mandatory Optional (para 3.122)

Audit certificate and report**** Mandatory Mandatory Mandatory Mandatory

**** Where the relevant legislation requires the auditor to report on the examination of the financial statements, the auditor will provide such a report. The form and content of the report is the responsibility of the auditor. Where the auditor has no substantive comment to make, the report will generally be in the form of a single sentence appended to the audit opinion in the form: ‘I have no observations to make on these financial statements’. Where there is a substantive report, it will be referred to in the audit opinion, but will be quite separate from it.

3.127 Where an entity has included the above disclosures in its annual report, it must

omit the equivalent disclosure notes to the financial statements referred to in

Chapter 5.

Publication of the Annual Report and Accounts

Entities that do not lay accounts before Parliament

3.128 DHSC group bodies that are not required to lay their ARA before Parliament (NHS

trusts, CCGs, NHS charities, other DHSC bodies) must publish them locally.

3.129 NHS trusts may publish ARAs in advance of the consolidated Resource Account

being submitted by DHSC to Parliament.

3.130 CCGs should refer to Chapter 3 CCG Appendix 1: Additional Requirements for

CCGs for further guidance.

Separate performance report overview and supplementary material

3.131 For DHSC group bodies that do lay accounts before Parliament there is discretion

to publish a separate performance report overview and supplementary material,

rather than the full ARA.

3.132 These accounts must not be published before the ARA has been laid before

Parliament.

3.133 The Companies Act 2006 refers to publishing a strategic report with

supplementary material. The FReM has replaced the strategic report in the public

sector with the performance report.

3.134 For the DHSC group, the performance report overview section (as defined in this

chapter) is the equivalent to the strategic report for these purposes.

3.135 The performance review: performance overview and supplementary material must

contain the Annual Governance Statement and must be made available to the

public free of charge.

3.136 A reasonable copying charge may be levied only for copies of the full audited

accounts, where the decision has been made to publish the strategic report and

supplementary material.

3.137 The supplementary material must, as a minimum in accordance with section 426A

of the Companies Act 2006:

• contain a statement that the performance report: performance overview is only part of

the entity’s ARA

• state how a person can obtain a copy of the full ARA

• state whether the auditor’s report on the full ARA was unqualified or qualified and, if

qualified, set out the auditor’s report in full together with any further material needed to

understand the qualification

• state whether, in that auditor’s report, the auditor’s statement as to whether the

performance report: performance overview and directors’ report was consistent with

the accounts and was unqualified or qualified. If it was qualified, set out the qualified

statement in full together with any further material needed to understand the

qualification, and

• contain a copy of that part of the directors’ remuneration report which sets out the

single total figure table in respect of the entity directors’ remuneration.

Chapter 3 Annex 1 - Annual Report and

Accounts Outline Structure

3.138 In summary, the structure for the Annual Report and Accounts, as defined by the

FReM is as follows:

Chapter 3 Annex 2 - Salary and Pension

disclosure tables: information subject to

3.139 This annex provides a standard layout for the disclosure of salary and pensions

paid to staff, which will be subject to audit.

3.140 The guidance that follows specifies minimum requirements for disclosure. In all

instances entities should consider how additional narrative and presentation can

assist users understanding of the disclosure.

3.141 Where considered appropriate entities should reference the statutory regulations

and guidance that govern the disclosures being made, providing links where

specific regulations are referenced.

Salaries and allowances

Table 1: Single total figure table

Name and title

(a) Salary (bands of £5,000) £000

(b) Expense payments (taxable) to nearest £100* £

(c) Performance pay and bonuses (bands of £5,000) £000

(d) Long term performance pay and bonuses (bands of £5,000) £000

(e) All pension-related benefits (bands of £2,500) £000

(f) TOTAL (a to e) (bands of £5,000) £000

*Note: Taxable expenses and benefits in kind are expressed to the nearest £100. The values and bands used to disclose sums in this table are prescribed by the Cabinet Office through Employer Pension Notices and replicated in the HM Treasury Financial Reporting Manual.

3.142 Provide comparative information for the prior year.

3.143 Disclose, for each individual, payments or compensation for loss of office, and

cross-reference this to other disclosures and notes in the accounts (for example,

exit packages and non-compulsory departures).

3.144 Where more than one individual occupied the same post over the year, details

must be disclosed here.

Table 2: Pension Benefits

Name and title

(a) Real increase in pension at pension age (bands of £2,500) £000

(b) Real increase in pension lump sum at pension age (bands of £2,500) £000

(c) Total accrued pension at pension age at 31 March 20xx (bands of £5,000) £000

(d) Lump sum at pension age related to accrued pension at 31 March 20xx (bands of £5,000) £000

(e) Cash Equivalent Transfer Value at 1 April 20xx £000

(f) Real increase in Cash Equivalent Transfer Value £000

(g) Cash Equivalent Transfer Value at 31 March 20xx £000

(h) Employer’s contribution to stakeholder pension £000

3.145 As non-executive directors do not receive pensionable remuneration, there will be

no entries in respect of pensions for non-executive directors.

Cash Equivalent Transfer Values

3.146 A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capital value

of the pension scheme benefits accrued by a member at a particular point in time.

3.147 The benefits valued are the member’s accrued benefits and any contingent

spouse’s (or other allowable beneficiary’s) pension payable from the scheme.

CETVs are calculated in accordance with SI 2008 No.1050 Occupational Pension

Schemes (Transfer Values) Regulations 2008.

Real Increase in CETV

3.148 This reflects the increase in CETV that is funded by the employer.

3.149 It does not include the increase in accrued pension due to inflation or contributions

paid by the employee (including the value of any benefits transferred from another

pension scheme or arrangement).

Content of tables: salaries and allowances

3.150 The requirements of Part 3 of Schedule 8 of the Large and Medium-sized

Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013

(the 2013 Regulations) are set out below. In the table in paragraph 5 of the

schedule, column:

(a) is salary and fees (in bands of £5,000)

(b) is all taxable benefits (total to the nearest £100)

(c) is annual performance-related bonuses (in bands of £5,000)

(d) is long-term performance-related bonuses (in bands of £5,000)

(e) is all pension–related benefits (in bands of £2,500)

• (additional columns must also be included for any other items in the nature of

remuneration - but excluding payments to former senior managers (see below))

(f) the final column is total of the above items (in bands of £5,000).

3.151 Each of the above requirements is disclosed for each individual in scope of this

reporting requirement and are described in further detail below.

(a) the total amount of salary and fees paid to or receivable by the person in

respect of qualifying services (in bandings of £5,000).

(i) Salary and other remuneration covers both pensionable and non-

pensionable amounts. The amounts paid or payable by the entity in

respect of the period the senior manager held office must be shown.

(ii) Where, for example, an individual held a contract of employment for the

entire financial year but was only a senior manager for six months, it is the

remuneration for six months which must be shown.

(iii) Where there has been overlap in a post, for example where there have

been two finance directors for a month, or where a temporary director has

covered another on long term absence, both must be shown, together with

the date the post was started or vacated.

(iv) Where the senior manager has been employed under separate contracts

for different services for the same entity, it may be useful to note this

below the table.

(v) Qualifying services of a senior manager include duties for the entity that

are not part of their management role.

(vi) Where a senior manager’s remuneration includes elements for their

management role and another role, for example clinical roles of medical

directors and similar staff, the remuneration report must reflect the total

remuneration paid by the entity for the individual’s services to the entity,

including remuneration for duties that are not part of their management

(vii) For transparency, entities must disclose the element of the individual’s

total remuneration from the entity that relates to their non-managerial role.

This disclosure need not include details of the individual components

(columns) of the single total figure table if the split between elements is not

available in this detail.

(viii) Where the individual receives part of their remuneration from another

body, for example a GP providing services as a director at a CCG, the

entity must make disclosures only in respect of its share of the individual’s

remuneration. This is separate and distinct to staff sharing considerations.

(ix) Note the requirement detailed in paragraph 3.78, relating to staff sharing

arrangements in which the total salary for the senior manager across all

the organisations they are engaged by, must be a separate and distinct

disclosure to the salary and fees paid in respect of qualifying services for

the entity.

(x) Paragraph 48 of Schedule 8 of the 2013 Regulations confirms that where

necessary distinctions are required to ensure compliance with the

reporting requirements, apportionments of payments can be made as is

appropriate.

(xi) Salary includes:

• all amounts paid or payable by the entity including recharges from any other entity

• overtime

• the gross cost of any arrangement whereby a senior manager receives a net amount

and an entity pays income tax on their behalf

• any financial loss allowances paid in place of remuneration

• geographical allowances such as London weighting, or other recruitment and retention

allowances, and

• any other allowance which is subject to UK taxation and any severance or ex-gratia

payments.

(xii) Salary Excludes

• recharges to any other entity

• reimbursement of out-of-pocket expenses

• reimbursement of "travelling and other allowances" (paid under determination order)

including home to work travel costs

• taxable benefits

• employers' superannuation and National Insurance contributions

• performance related bonuses (these are recorded separately), and

• any amount paid which the director must subsequently repay.

(b) all taxable benefits (to the nearest £100 and disclosed in £s).

(i) This is the gross value of such benefits before tax. It includes:

• expenses allowances that are subject to UK income tax and paid or payable to the

person in respect of qualifying services, and

• benefits received by the person (other than salary) that are emoluments of the person

and are received by them in respect of qualifying services.

(ii) A narrative disclosure to detail the nature of these benefits. Entities may

consider it informative to disclose the footnote to table 1.

(c) annual performance pay and bonuses (in bandings of £5,000)

(i) These comprise money or other assets received or receivable for the

financial year as a result of achieving performance measures and targets

relating to a period ending in the relevant financial year other than:

• those which result from awards made in a previous financial year and the final vesting

is determined as a result of achieving performance measures or targets relating to a

period ending in the relevant financial year, and

• those which are receivable subject to the achievement of performance measures or

targets in a future financial year.

(ii) Where an amount included in column (c) is for a deferred bonus, the

amount and percentage of such deferral must be disclosed in a note

accompanying the table.

(d) long-term performance pay and bonuses (in bandings of £5,000).

(i) These comprise money or other assets received or receivable for periods

of more than one year where final vesting:

• is determined as a result of achieving performance measures or targets relating to a

period ending in the relevant financial year, and

• is not subject to the achievement of performance measures or targets in a future

financial year.

(ii) For both columns (c) and (d), where the performance measures or targets

are substantially (but not fully) completed by the end of the financial year,

the amount shown in the table may include sums which relate to the

following financial year but this must be explained in the report. In the

following year’s report, the amount must not be included as remuneration

for that year.

(iii) For every component of remuneration included in columns (c) or (d), a

note accompanying the table must disclose:

• details of any performance measures and the relative weighting of each;

• for each performance measure:

• the performance targets set at the beginning of the performance period and the

corresponding value of bonus achievable, and

• details of actual performance against the targets set and measured over the

performance period and the resulting bonus awarded.

• where discretion has been exercised in the award, details of how the discretion was

exercised and how the resulting bonus was determined.

(iv) Compiling the above detail for all remuneration regarding performance pay

and bonuses will assist entities in determining whether the sums should be

disclosed in column (c) or column (d).

(e) all pension-related benefits (in bandings of £2,500), including:

• the cash value of payments (whether in cash or otherwise) in lieu of retirement

benefits, and

• all benefits in year from participating in pension schemes. These are the aggregate

input amounts, calculated using the method set out in section 229 of the Finance Act

• Paragraph 10(1)(e)(ii)(cc) of schedule 8 of SI 2013 No.1981, The Large and Medium-

sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013

(update to the Finance Act 2004) requires the exclusion of any employee contributions

from the figure arrived at to reach the amount which must be disclosed.

(i) This figure will include those benefits accruing to senior management from

membership of the NHS Pension Scheme which is a defined benefit

scheme (although accounted for by NHS bodies as if it were a defined

contribution scheme). It is to be disclosed in £2,500 bands following the

calculation expressed as follows:

*The real increase is the difference between the annual rate of pension or value of any lump

sums payable to the director at the end of the financial year and the rate or values payable at

the start of the year. It excludes increases due to inflation/decreases due to transfer of

pensions rights.

(ii) The information will be provided by the pension scheme the director is a

member of, as part of the Greenbury disclosure requirements.

(iii) Employee contributions for the year are deducted in the calculation above.

(iv) Annex D of the NHS Business Services Authority guidance on the

Disclosure of Senior Managers Remuneration (Greenbury) 2020 provides

further detail regarding the context and calculation to be made by entities,

as well as a worked example to assist preparers.

(v) Specific consideration should be given to the provision of additional

narrative to explain how the figure in column (e) is calculated, what the

figure signifies and offering high level explanation as to significant

variations between senior managers in year or between years for the

same individual, if this is considered to be informative.

(vi) As such the following is recommended to be disclosed;

"The value of pension benefits accrued during the year is calculated as the real

increase in pension multiplied by 20, less, the contributions made by the individual.

The real increase excludes increases due to inflation or any increase or decrease

due to a transfer of pension rights.

This value does not represent an amount that will be received by the individual. It

is a calculation that is intended to convey to the reader of the accounts an

estimation of the benefit that being a member of the pension scheme could

provide.

The pension benefit table provides further information on the pension benefits

accruing to the individual."

(vii) Further to the above, entities considering it informative to expand upon the

reasons as to why significant variation is found between pension related

benefits calculated, may wish to insert a paragraph similar to the following

but including only pertinent factors for their entity;

"Factors determining the variation in the values recorded between individuals

include but is not limited to:

A change in role with a resulting change in pay and impact on pension benefits

A change in the pension scheme itself

Changes in the contribution rates

Changes in the wider remuneration package of an individual"

(f) the total of the values disclosed in columns (a) to (e) (in bandings of £5,000).

(i) This is expressed in bandings of £5,000 to be consistent with the salary

and performance pay bandings.

Complex Arrangements

(i) In line with paragraph 3.140, Part 1 of Schedule 8 of the 2013 regulations,

paragraph 2 (2) confirms that the provisions of the Schedule;

• do not prevent entities setting out additional information as is considered appropriate

• allow any items to be shown in greater detail.

(ii) Specific consideration of these points should be made where complex

arrangements exist.

Content of tables: pensions

3.152 Total pension entitlement. For each senior manager, Companies Act regulations

require disclosure of:

• the pension entitlement at the end of the year: this requirement is met by the

completion of the “pensions” table, the contents of which are described below

• a description of additional benefits that will become receivable by the individual in the

event that they retire early, and

• separate disclosures where the individual is a member of more than one scheme.

3.153 Pension entitlements: The information required in FReM 6.5.9 must be disclosed

as follows:

(a) the real increase during the reporting year in the pension at pension age in

bands of £2,500

(b) the real increase during the reporting year in the pension related lump sum at

pension age in bands of £2,500

(c) the value at the end of the reporting year of the pension at pension age in

bands of £5,000

(d) the value at the end of the reporting year of the pension related lump sum at

pension age in bands of £5,000

(e) the value of the cash equivalent transfer value at the beginning of the reporting

period to the nearest £1,000

(f) the real increase in the cash equivalent transfer value at the end of the

reporting period to the nearest £1,000, and

(g) the value of the cash equivalent transfer value at the end of the reporting

period to the nearest £1,000

(h) in the case of a stakeholder pension account, the employer’s contribution (the

bulleted disclosures will not apply).

Payments for loss of office

3.154 For each individual who was a senior manager in the current or in a previous

financial year, that has received a payment for loss of office during the financial

year, the following must be disclosed:

• the total amount payable to the individual, broken down into each component

• an explanation of how each component was calculated

• any other payments to the individual in connection with the termination of services as a

senior manager, including outstanding long-term bonuses that vest on or following

termination, and

• where any discretion was exercised in respect of the payment, an explanation of how it

was exercised.

Payments to past senior managers

3.155 The report must contain details of any payments of money or other assets to any

individual who was not a senior manager during the financial year but has

previously been a senior manager at any time.

3.156 The following payments do not need to be reported in this disclosure:

• payments for loss of office (which are separately reported above)

• payments that are otherwise shown in the single total figure table

• payments that have already been disclosed by the entity in a previous remuneration

report

• payments for regular pension benefits that commenced in a previous year, and

• payments for employment or services provided by the individual other than as a senior

manager of the entity.

NHS Business Services Authority (NHS BSA) Greenbury Guidance

3.157 The revised NHS BSA guidance concerning Disclosure of Senior Managers

Remuneration (Greenbury) 2020 offers significant detail and worked examples

assisting entities with the derivation of the values for each column.

3.158 The guidance makes specific reference to examples of deriving the appropriate

values for senior managers only in post part year.

Discussion with auditors regarding remuneration reporting

3.159 Entities should note paragraph 49, Schedule 8 of the 2013 Regulations which

requires information to be disclosed only so far as it is contained in the entity's

books and papers, available to members of the public, or the entity has a right to

obtain it.

3.160 It is advisable that entities establish these expectations with auditors early in the

engagement. This is particularly necessary where changes and or additions are

being considered in relation to disclosures subject to audit.

Chapter 3 Annex 3 – Exit packages and

severance payments

Introduction

3.161 This annex provides two model tables designed to meet HM Treasury reporting

requirements for exit packages and non-compulsory departures.

3.162 These additional disclosures are required to strengthen accountability in the light

of public and Parliamentary concern about the incidence and cost of these

payments. Both tables are shown at the end of the Annex.

3.163 Tables 1 and 2 must be consistent with related disclosures in (a) the

Remuneration Report and (b) the Losses and Special Payments Note.

3.164 Where entries here relate to individuals listed in the Remuneration Report, there

must be a separate disclosure in the Remuneration Report listing details of the

individuals’ severance payments (whether compulsory or voluntary).

3.165 Similarly, the Losses Statements must be consistent with those listed here under

“special non-contractual payments”. In line with the consistency requirements

stated above, comparative information should be included.

Exit packages

3.166 This note (table 1) discloses details of all exit packages, analysed between

compulsory redundancies and other, or non-compulsory, departures. The values

of these exit packages are analysed by cost band.

Non-compulsory departures

3.167 This note (table 2) discloses the number of non-compulsory departures which

attracted an exit package in the year, and the values of the associated payment(s)

by individual type.

3.168 The note is prepared on the same basis as table 1 i.e. showing the exit packages

agreed in the year, irrespective of the actual date of accrual or payment.

3.169 The total value in this note must agree with the Total Resource Cost for Other

Departures Agreed in table 1.

3.170 However, there are likely to be differences in the component numbers as table 1

relates to the number of individuals receiving an exit package while this note gives

the number for each component.

3.171 As a single exit package is likely to be made up of several components each of

which will be counted separately, the total number is likely to be higher than the

number of individuals.

3.172 Contractual payments relating to individual contractual entitlements are to be

disclosed in the following categories:

• voluntary redundancies including early retirement costs (the cost to be used must

include any top-up to compensation provided by the employer to buy out the actuarial

reduction on an individual’s pension)

• mutually agreed resignations (MARS)

• early retirements in the efficiency of the service and payments in lieu of notice

(contractual)

3.173 Exit payments made following an Employment Tribunal or court order are also

included. Any such payments are considered contractual as the orders have to be

paid by the party against whom the order is made, although may relate to

compensation for loss of office.

3.174 Non-contractual payments are those made outside contractual or legal obligation,

including those from judicial mediation.

3.175 Pre-authorisation from the HM Treasury (or the relevant national body for cases

below de minimis limits) must be sought for such payments before they are agreed

with the employee.

3.176 In the footnote the amounts of any non-contractual payments in lieu of notice are

to be listed.

3.177 A further footnote discloses the number and value of non-contractual payments

made to individuals where the payment was more than 12 months annual salary.

3.178 The reference salary for this disclosure is the annualised salary at the date of

termination of employment, and excludes bonus payments and employer’s

pension contributions.

3.179 The entity must also disclose the maximum (highest), minimum (lowest) and

median values of special severance payments, i.e. amounts included in the ‘non-

contractual payments’ line of the table.

3.180 It follows that for any values included here, working papers will document the

relevant approval for the payment.

Table 1: Exit packages

Redundancy and other departure costs have been paid in accordance with the provisions of the [NHS Scheme name]. Exit costs in this note are the full costs

of departures agreed in the year. Where the [organisation] has agreed early retirements, the additional costs are met by the [organisation] and not by the NHS

Pensions Scheme. Ill-health retirement costs are met by the NHS Pensions Scheme and are not included in the table.

[Note: entities must provide additional text if any payments are not covered by the [NHS Pensions scheme], for example ex-gratia payments agreed with the

Treasury / exit scheme details where using another scheme (e.g. MARS).]

This disclosure reports the number and value of exit packages agreed in the year. Note: the expense associated with these departures may have been

recognised in part or in full in a previous period.

Exit package cost band (including any special payment element)

Number of compulsory redundancies

Cost of compulsory redundancies

Number of other departures agreed

Cost of other departures agreed

Total number of exit packages

Total cost of exit packages

Number of departures where special payments have been made

Cost of special payment element included in exit packages

WHOLE NUMBERS ONLY £s

Less than £10,000

£10,000 - £25,000

£25,001 - £50,000

£50,001 - £100,000

£100,001 - £150,000

£150,001 - £200,000

>£200,000

Totals Agrees to A below

Table 2: Analysis of Other Departures

Type of Other Departures Agreements Number

Total Value of Agreements £000s

Voluntary redundancies including early retirement contractual costs

Mutually agreed resignations (MARS) contractual costs

Early retirements in the efficiency of the service contractual costs

Contractual payments in lieu of notice*

Exit payments following Employment Tribunals or court orders

Non-contractual payments requiring HMT approval**

Total Agrees to total in table 1

As a single exit package can be made up of several components each of which will be counted separately in this Note, the total number above will not necessarily match the total numbers in Note xx which will be the number of individuals. * any non-contractual payments in lieu of notice are disclosed under “non-contractual payments requiring HMT approval” below. **includes any non-contractual severance payment made following judicial mediation, and X (list amounts) relating to non-contractual payments in lieu of notice. X (number) non-contractual payments (£x,000) were made to individuals where the payment value was more than 12 months’ of their annual salary. The Remuneration Report includes disclosure of exit payments payable to individuals named in that Report

Chapter 3 Annex 4 – “Off-payroll”

engagements

Introduction

3.181 A HM Treasury requirement for public sector bodies to report arrangements

whereby individuals are paid through their own companies (and so are responsible

for their own tax and NI arrangements, not being classed as employees) has been

promulgated in Public Expenditure System (PES) guidance.

3.182 HM Treasury’s guidance on this is summarised below.

Reformed off-payroll Working Rules

3.183 The Government has reformed the Intermediaries legislation, introducing Chapter

10 Part 2 Income Taxes (Earnings and Pensions) Act 2003 (ITEPA 2003)

supporting Chapter 8 Part 2 ITEPA 2003, often known as IR35.

3.184 The legislation for the off-payroll working rules within the public sector applies to

payments made on or after 6 April 2017.

3.185 Under the reformed off-payroll working rules, Departments must determine

whether the rules apply when engaging a worker through a Personal Service

Company (PSC).

3.186 Guidance and more information can be found here: Off-payroll working rules

(IR35) for public authorities - GOV.UK.

3.187 The cross-government Tax Centre of Excellence (TCoE) has similarly offered

guidance on common themes and offer links to additional Cabinet Office and

HMRC guidance. This guidance is accessible to all on the TCoE website.

3.188 DHSC group bodies will already be operating the new rules to provide employment

status determinations for all of their off-payroll engagements.

3.189 Bodies will have also established a periodic re-assessment mechanism from 6

October 2017, in line with the revised reporting requirements of Table 2, covered

below.

Inclusion in Annual Reports

3.190 DHSC group bodies must include the disclosures set out below within the staff

report section of their ARA (or within the financial statements if they wish, but if so,

clearly signposted from the staff report).

3.191 There is no requirement to have the disclosure audited (although inclusion in the

financial statements will bring the disclosure into the scope of audit), and DHSC

will not require information for consolidation purposes from NHS trusts, NHS

foundation trusts and CCGs.

3.192 DHSC will, however, disclose comparable figures in respect of its own core and

agency business, and consolidated figures from DHSC ALBs, together with a note

that individual DHSC group bodies are required to make disclosures in the

remuneration report section of their ARA.

3.193 DHSC group bodies should be aware that this information is provided in the public

interest and may be expected to be requested under the Freedom of Information

Act 2000.

Guidance

3.194 Following the Review of the tax arrangements of public sector appointees

published by the Chief Secretary to the Treasury on 23 May 2012, departments

and their arm’s length bodies (this is taken to include all those bodies included

within the DHSC reporting boundary) must publish information on their highly paid

and/or senior off-payroll engagements.

3.195 Payments to GP practices for the services of employees and GPs are deemed to

be “off-payroll” engagements, and are therefore subject to these disclosure

requirements.

3.196 HM Treasury guidance confirms that the reported data should include (where paid

£245 or more per day per day) those appointments to which the off-payroll

legislation applies whereby the department and their ALBs are required to

undertake IR35 assessments under Chapter 10 ITEPA 2003.

3.197 This applies as defined to: "a worker (or contractor), not employed by the client

department, the supplier or any other organisation within the supply chain, that

instead provides their services through their own limited company or another type

of intermediary to the client. An intermediary will usually be the worker’s own

personal service company but could also be a partnership or an individual.”

3.198 Reported data should also include those appointments that are not on the entities

payroll and where the off-payroll legislation does not apply. For example, the

legislation does not apply to sole traders or workers that are employed by and on

the payroll of an umbrella company, agency or other organisation in the supply

chain.

3.199 Off-payroll appointments should be included regardless of the commercial route

through which they are engaged. The disclosures are not limited to workers

engaged via the Public Sector Resourcing Framework and should include

procurements of resource / workers through other frameworks such as, but not

limited to, Digital Outcomes and Specialists, G-cloud, Non-Medical Non-Clinical

and all other commercial routes aside.

3.200 Those not to be included in the reported data include workers that are controlled

and directed by external suppliers in the course of providing the department with a

contracted-out service, workers who are seconded to the department and on the

payroll of the supplying organisation and consultants that are providing

consultancy services to the department that do not go beyond provision of advice.

3.201 As part of the remuneration report section of their ARA DHSC group bodies must

present the data described below in the following sections.

Length of all highly paid off payroll engagements

3.202 For all highly paid off-payroll engagements as of 31 March 2022, greater than

£245 per day:

• the total number of existing engagements as of 31 March 2022

• the number that have existed for less than one year at time of reporting

• the number that have existed for between one and two years at time of reporting

• the number that have existed for between two and three years at time of reporting

• the number that have existed for between three and four years at time of reporting

• the number that have existed for four or more years at time of reporting,

3.203 Disclosure must be in the format shown in Table 1: Length of all highly paid off-

payroll engagements below.

Off-payroll workers engaged at any point during the financial year

3.204 For all off-payroll appointments engaged at any point between 1 April 2021 and 31

March 2022, greater than £245 per day:

• the number of off-payroll workers engaged between April 2021 and March 2022

• the number not subject to off-payroll legislation

• the number subject to off-payroll legislation and determined as in-scope of IR35

• the number subject to off-payroll legislation and determined as out-of-scope of IR35

• the number of engagements reassessed for compliance or assurance purposes during

the year

• of which the number of engagements that saw a change to IR35 status following

review.

3.205 Disclosure must be in the format shown in Table 2: Off-payroll workers engaged at

any point during the financial year below.

3.206 Off-payroll worker tax liabilities and or HMRC penalties imposed as a result of non-

compliance with off-payroll worker legislation must be disclosed as a loss per the

requirements outlined in the table below paragraph 3.126. References to such

losses must also be disclosed beneath the table 2.

Board Member/Senior Management engagements

3.207 For any off-payroll engagements of board/Governing Body members and/or senior

officials with significant financial responsibility between 1 April 2021 and 31 March

2022 reporting entities must also disclose:

• the number of off-payroll engagements of board/Governing body members and/or

senior officials with significant financial responsibility

• details of the exceptional circumstances that led to each of these engagements

• details of the length of time each of these exceptional engagements lasted

• the total number of individuals both on and off-payroll that have been deemed “board

members and/or senior officials with significant financial responsibility” during the

financial year. This total figure must include engagements which are ON PAYROLL as

well as those off-payroll.

3.208 Disclosure must be in the format shown in Table 3: Off-payroll board

member/senior official engagements below.

Table 1: Length of all highly paid off-payroll engagements

For all off-payroll engagements as of 31 March 2022, for more than £245(1) per

Number

Number of existing engagements as of 31 March 2022

Of which, the number that have existed:

for less than one year at the time of reporting

for between one and two years at the time of reporting

for between 2 and 3 years at the time of reporting

for between 3 and 4 years at the time of reporting

for 4 or more years at the time of reporting

Note (1) The £245 threshold is set to approximate the minimum point of the pay scale for a Senior Civil Servant.

Table 2: Off-payroll workers engaged at any point during the financial year

For all off-payroll engagements between 1 April 2021 and 31 March 2022, for

more than £245(1) per day

Number

No. of temporary off-payroll workers engaged between 1 April 2021 and 31 March 2022

Of which...

No. not subject to off-payroll legislation(2)

No. subject to off-payroll legislation and determined as in-scope of IR35(2)

No. subject to off-payroll legislation and determined as out of scope of IR35(2)

No. of engagements where the status was disputed under provisions in the off-payroll legislation

Of which: no. of engagements that saw a change to IR35 status following review

Note (1) The £245 threshold is set to approximate the minimum point of the pay scale for a Senior Civil Servant. (2) A worker that provides their services through their own limited company or another type of intermediary to the client will be subject to off-payroll legislation and the Department must undertake an assessment to determine whether that worker is in-scope of Intermediaries legislation (IR35) or out-of-scope for tax purposes.

Table 3: Off-payroll board member/senior official engagements

For any off-payroll engagements of board members, and/or, senior officials with

significant financial responsibility, between 1 April 2021 and 31 March 2022

Number of off-payroll engagements of board members, and/or senior officers with significant financial responsibility, during the financial year (1)

Total no. of individuals on payroll and off-payroll that have been deemed “board members, and/or, senior officials with significant financial responsibility”, during the financial year. This figure must include both on payroll and off-payroll engagements (2)

Note (1) There should only be a very small number of off-payroll engagements of board members and/or senior officials with significant financial responsibility, permitted only in exceptional circumstances and for no more than six months (2) As both on payroll and off-payroll engagements are included in the total figure, no entries here should be blank or zero In any cases where individuals are included within the first row of this table the department should set out: • Details of the exceptional circumstances that led to each of these engagements. • Details of the length of time each of these exceptional engagements lasted.

Chapter 3 CCG Appendix 1: Additional

Requirements for CCGs

3.209 In addition to the requirements set out in Chapter 3, CCGs are required to publish

their full ARA in accordance with arrangements notified via the NHSE and

NHSI/CCG SharePoint. They may additionally produce and distribute a separate

Performance Report: Overview with Supplementary Material, produced in

accordance with this manual.

3.210 For CCGs the gender distribution must be analysed as follows:

• members of the governing body

• all other senior managers, including all managers at grade VSM, not included above,

• all other employees not included in either of the previous two categories.

Business information

3.211 CCGs must ensure they include sufficient information on the delivery of their

statutory duties to comply with the requirements of Section 14Z15 Paragraph 2 of

the National Health Service Act 2006 (as amended) and the CCG Assurance

Framework.

Details of Members of the Membership Body and Governing

3.212 The Report must provide:

• the member practices, forming the Membership Body, of the CCG

• the names of the Chair and Accountable Officer throughout the financial year and up

to the signing of the ARA

• the composition of the Governing Body throughout the financial year and up to the

signing of the ARA (including advisory and lay members)

• the names of the individuals forming the Audit Committee throughout the financial year

and up to the signing of the ARA, and

• reference to the Remuneration Report for details of the membership of the

Remuneration Committee, and the Governance Statement for details of and

membership of all other Governing Body and Membership Body Committees.

Chapter 3 CCG Appendix 2 – Pension

Disclosures

Introduction

3.213 For CCGs the correct classification of GPs on the Governing Body will drive the

salary and pension disclosures required in the Remuneration Report.

3.214 Within the NHS Pensions Scheme there are two types of member:

• Practitioner, and

• Officer.

3.215 Practitioner covers medical, dental and some ophthalmic practitioners, who meet

specific criteria.

3.216 In summary there are three types of medical Practitioner in NHS pension terms:

• a type 1 medical Practitioner is a GP Provider (GP partner, single–hander) who has

entered into a GMS, PMS, or APMS contract

• a type 2 medical Practitioner is generally a salaried GP employed by a (GMS, PMS, or

APMS) surgery, and

• a Locum Practitioner is a freelance GP locum who deputises or assists on a temporary

basis in a surgery.

3.217 All of the above must be on the medical performers list and registered with the

General Medical Council.

3.218 Their NHS Pensions Scheme Employing Authority is NHSE and NHSI even for

salaried GPs employed by a surgery.

3.219 Individuals not meeting the criteria to be classed as a Practitioner in NHS Pension

terms are classed as an Officer.

3.220 Tables 1 and 2 which follow describe how the benefits received by the different

governing body members must be disclosed.

Prior Year Comparatives

3.221 Where prior year disclosures do not comply with this guidance they must be

restated, to allow meaningful comparison year on year. Narrative to explain the

reason for restatement must be agreed with local auditors.

Table 1: Governing Body Member is a Medical Practitioner

Type of Contract

Contract of Service with individual

Contract for Service with individual

Contract with GP Practice/Surgery

Contract with Corporate Body

Employment Status

Employee Off Payroll Worker

Payment Route Payroll Accounts Payable*

Accounts Payable

Eligible for NHS Pension

Yes No

NHS Pension Status

Officer Practitioner n/a

NHS Pension Employing Authority

CCG NHSE and NHSI n/a

Responsibility for Pension Contributions

Legal requirement on the CCG to deduct at source, as agent for NHSE and NHSI

GP n/a

Payment Method

As part of routine employee contributions to NHS Pensions

SOLO Form submitted to NHSE and NHSI (PCS) together with pension payment due

Salary Disclosures

Full disclosure as per GAM

Gross payment to the individual disclosed in the salary column (including employer pension contributions, where relevant). All other columns £NIL. Note required below the salary table to explain the off-payroll payment arrangement, as per GAM requirement.

Off Payroll Worker Disclosures

n/a Include as per GAM guidance. Confirmation of regularity of tax arrangements and tax payments required, as per GAM guidance.

Pension Disclosures

Full disclosure as per GAM. Request information from NHS Pensions in line with Greenbury process.

Off payroll worker – no pension disclosure required. Exclude from the pensions table. Include a note under the pension table to explain why some individuals included in the salary table are not included in the pension table.

* Please note that HMRC typically deem services provided directly to fulfil the role of

Governing Body Member as being those of an “office holder”. For payments relating to

these services, the “office holder” should typically be treated as an employee, with

deduction at source through the payroll for taxation and national insurance payments.

CCGs should liaise with their local HMRC contact in case of query.

On occasions HMRC may deem long term contract for service holders as ‘office holders’ of

the organisation, and require the organisation to deduct income tax and national insurance

at source. This designation does not change their employment status with the CCG (as an

off-payroll worker rather than an employee of the CCG) but is merely a route for HMRC to

collect tax and national insurance ‘in-year’ rather than 10 months after the year end.

In this situation the deduction of tax and national insurance would be processed via ESR,

and the resulting deduction paid over in the normal way. An Officer Pension record must

NOT be created in ESR and Officer Pension must NOT be deducted via payroll.

Practitioner Pension must continue to be deducted ‘off-system’ and paid over using the

SOLO Form. The individual remains an off-payroll worker.

Table 2: Governing Body Member is not a Medical Practitioner

Type of Contract Contract of Service with individual

Contract for Service with individual

Contract with Corporate Body

Employment Status Employee Off Payroll Worker

Payment Route Payroll Accounts Payable* Accounts Payable

Eligible for NHS Pension

Yes No

NHS Pension Status Officer n/a

NHS Pension Employing Authority

CCG n/a

Responsibility for Pension Contributions

CCG n/a

Payment Method

As part of routine employee contributions to NHS Pensions

Salary Disclosures Full disclosure as per GAM

Gross payment to the individual disclosed in the salary column. All other values £NIL. Note required below the salary table to explain the off-payroll payment arrangement, as per GAM requirement.

Off Payroll Worker Disclosures

Include as per GAM guidance. Confirmation of regularity of tax arrangements and tax payments required, as per GAM guidance.